The Innovative Frame Of The Bank-Owned Fund Management Company Under Mix-Industry Competitions

At the very end of China's entry period into WTO, bank-system reform, which is the core section of the economy reform, is bringing tremendous changes to the banking industry while our market runs more and more according to the rules of the whole world. The trend of fewer regulations has embodied this internationalization requirement, as the result, Chinese banks have stepped out to setup their own fund management companies, as to be considered as the first step to entry into the core of capital market. Under the world trend of mix-industry operation, in this paper we discuss three key problems that form the designed frame for banks' entry into the fund market: the market orientation of bank-owned funds, the product-family structure and the inner-control mechanism of risks.In order to clarify the mix-industry competitions as a normal phenomenon in financial industry, we first analyze the multi-structures of businesses and profit of world's top bank groups. And we find that it is the best choice for commercial banks to enter into the non-banking industries and to form a multi-structure of assets, return and businesses under fierier competitions. And meanwhile, the rapid expand of other financial industries in China has alarmed the banks of the future lose of customers;and we also conclude from the facts of the conflict in the bank-fund cooperation that the economies of scope in bank-fund business conjunctions can only be elaborated effectively under an unified structure of ownerships. So under this consideration, we then analyze the structures of bank-owned fund management companies' future customers in asset volume, jobs and risk-return characteristics, money market operation and account management experiences, and the shortfall of the fund industry nowadays. According to the analysis above, we then design the market orientation of bank-owned fund management companies as a limited fund market. Under this design, the fund-family structure is defined as a comprehensive style, in which the money market funds and the bond funds are set to be the main products, and others to be optional according to market situations. For the special ownership connections between banks and their owned fund management companies, to designan inner-control mechanism is also an essential part of the innovative frame for bank-owned fund management companies. In this paper, we not only discuss the regulation construction, but also learn from the advanced risk inner-control mechanism technologies of German commercial banks and J.P Morgan. Finally, we give some useful directions for follow-up research work in this field.