Research On Mixed Operation Model And Supervision Of China's Financial Industry

The waves of financial freedom swept western financial industry at the end of 70s and the beginning of 80s last century. All financial institutes had begun their diversifying history from then on and they converted their business to the multibusiness. Their business covered stock share trading. There was a trend of financial freedom and globalization in financial world. The financial institutes in Western Europe and Japan has broken down the traditional barriers for the industry. The trend of diversification could be easily observed. The freedom has proceeded faster than ever before. In November of 1999, the signing of'the law on financial service'indicated that pioneers of separated operation model and its followers had to disregard this regular. As China has joined WTO, to be a single business or multibusiness has become a hot topic in financial industry in China. How to choose a mechanism adapting some foreign experience to fit in Chinese economic reality? How to manage the tension between the present and future demand? How to select a better evolutionary history of financial mechanism. In accordance with the status-qua of Chinese financial industry, it will conclude that there are inevitability and feasibility of mixed operation for Chinese financial mechanism.It's a disputable financial issue that implementing mixed operation or separated operation. It refers to not only the management system of financial industry but also the financial administration system of the government. Facing to the trend of financial industry mixed operation in the world, how to reply the change should be put on the agenda.This thesis discusses the feasibility of financial industry mixed operation from theory and practice. Firstly, it elaborates the theory of mixed operation of financial industry. Secondly, it analyses and researches the financial system of mixed operation in USA and German. Lastly, it concludes the profitable inspiration for the financial development of China. After that, looks back on separated operation and separated supervision system, and points out the issues, which the system is facing with at present. Now separated operation is holding the ruling poison, however, facing to the demand of international economic globalization, it is necessary to reform financial system and develop mixed operation. Then, though analyzing the inevitability and feasibility of mixed operation and the synthetic contrast with mixed operation, it proofs the model of financial holding company is the practical model of financial system mixed operation in our country. As we have known the advantages of financial holding company, we must recognize the risk we have took. The thesis also raises a tentative reform idea of financial supervision system and some constructive suggestions on the supervision of financial holding company.This dissertation consists of four parts.The first part introduced the theory and practice of mixed operation of financial industry. Mixed Operation of the financial industry to come to the main development trends of the theoretical support. Section two describes the practice of foreign financial operation, the United States and Germany introduced the system of two different financial operation. The changing process of American financial mechanism can be described as multibusinesses-single business-multibusiness. It is characterized that it experienced 60 years from single business to multibusiness. Multibusiness was realized by the control of financial holding over SBU in different industries. The German bank is all-functional. All-functional banks have contributed a lot to the economic development of country and are gradually becoming global diversified financial group.In the second part, it does the comparative study of mixed and separated operation of financial industry. First, the evolution of China's financial industry operating system for a historic recall. Before 1979,it was the phase of"Absolutely centralized system". After that, different financial institute co-existed and banks began diversifying. Under such conditions, this period can be titled multibusiness. From 1993 on, banking mechanism gradually has been becoming"single business and single business management"model. The second section will look at advantages and disadvantages of two mechanisms respectively. The comparing analysis comes from stability, efficiency, and matching and best choice of evolutionary track. In general, the analyses will emphasize on stability and efficiency comparing advantages and disadvantages of the two mechanisms. Section three of this chapter analysis the pressure and challenges the separated operation face under the new situation. Taking all the circumstances, China's financial system needs to change to mixed operation from separated operation.The third part concludes that multibusiness is a road ahead for Chinese banking industry. This conclusion is backed up by the proceeding globalization, maturity of banking industry and the requirement of fast development. Multibusiness is conditioned by dynamic marketing competitive environment, effective internal control and high standard financially auditing. There are three forms to convert single business to multibusiness: the first one is the module of Germany and Swiss to break down all legal barriers to limit business scope and to develop complex financial industry. The second module of Japan allows financial institute to set up new firms to invest in other financial industries. The merger of different financial institutes to form metropolitan features the third model of Europe or America. Which way fits in our financial industry? The close examination on the ability to audit and maturity of financial market purports that it is likely to convert from single business to multibusiness by forming financial holding companyThe fourth part introduced the regulatory approach chosen of China's financial industry during the restructuring of China's financial sector. Firstly, it explained the risks the financial holding company face, consists of:(1)internal risks; (2) the risk of repeated use of capital; (3) risks of opaque structure; (4) The risk of a conflict of interest; (5) A number of cooperation and information sharing between regulators. Secondly, it propose measures and proposals for the supervision of the financial holding company: First, we must further strengthen the construction of a system of financial supervision. Second, introduce the risk warning mechanism. Third, prevent hidden dangers. Thirdly, it expounds on the reform of China's financial supervision and gives some preliminary ideas. Looking at the current situation, this paper at this stage of our financial supervisory work of a few suggestions: First, the central bank and banking, securities and insurance regulatory bodies should actively explore three mutual cooperation and coordination mechanisms. Second is the financial holding company stationed timely implementation of the system, develop the regulatory model of financial holding companies and imply special supervision. Third, improve the flow of talent and exchanges integrated monitoring resources, and create regulatory efforts, establish a good incentive and restraint mechanisms.