The Banks' Efficiency Analysis Under The Financial Holding Company

After the passing through of "the Law of the Financial Holding Company in Taiwan" in July 2001,14 Financial Holding Companies had been established by 2004. What does effect on the banks' efficiency after the establishment of the Financial Holding Company? Was the efficiency of the FHC banks superior to that of the non-FHC banks? This was the first subject of the study. Then, we will study the factors related to the banks' efficiency and put forward the advice in improving the banks' efficiency. Finally, we will analyze the revelation that we can draw from the Taiwan's FHC Model. The results of the study showed that the efficiency of the FHC banks was superior to that of the non- FHC banks in the operation efficiency and operation stability. At the same time, as for the whole finance industry, whether the bank was under FHC or not, their efficiencies were improved very much. Therefore, the establishment of the Financial Holding Company urged all the banks to enhance their operation efficiency in order to survival. In the analysis about the factors that effected the banks' operation efficiency, the conclusion indicated that the main factors that effected the banks' operation efficiency were the banks' scale, operation formation and the rate of the loans in the market. In addition, the capital adequacy had some influence on the banks' operation efficiency but the influence wasn't steady. The whole study made clear that the policy of the FHC was undoubtedly an effective policy. As we know, the banking of the mainland also exists the problems about the too much banks, small operation scale and the low operation efficiency, so the the banking' reform of the mainland can refer to the Taiwan's FHC Model.