The Development Of Financial Holding Company And Performance Analysis

With the overwhelming coming of foreign financial institutions, China's domestic financial institutions are facing a great challenge. What strategies should Chinese financial institutions have to compete with the foreign ones? Apparently, establishing an effective structure is the most essential way. The paper highlights the definition, evolution and performance of finance holding company. Through the method of empirical analysis, the author thinks that Chinese financial system should adopt pure holding pattern to enhance core competence.The first section introduces the mode evolution, definition and pattern of financial holding company as well as its development background. The factors which incur the emergence of financial holding company mainly contain introduction of free market competition, financial system innovation, technology development and less finance control.The second section briefly discusses the conception of mixed holding company and pure holding company, and analyzes the merits of pure holding company. The second,third and forth subsections deal with the development of financial holding company of the United States, Japan and the United Kingdom separately. Based on the comparison of the three typical financial markets, it shows that pure holding company has comparative advantages on management structure, risk control and operation efficiency.The article stresses on the third section, which focuses on the performance of financial holding company. It investigates whether operation efficiency and market share rate can rise after the integration of financial holding companies as anticipated. The advantages of financial holding company are from the homogeneous trait of financial products and the demands for reducing cost and insulating risks through increasing the frequency of financial trade. The effective performances of financial holding company's integration derive from economies of scale, economies of scope, and synergism.The last chapter is empirical analysis. Based on performance comparison method, the article examines the performance of China International Trust and Investment Corporation (CITIC) Holdings as the case study.Through the introduction of background and typical models of financial holding company, the article analyzes the advantages of pure financial holding company in several respects. The author considers that tracing the experience of other countries, pure financial holding company is the main strength in China's present and future finance system. Also, it is the most effective way to upgrade finance service, increase competence of financial products and take up market share. The distinct views lay in the discussion that the homogeneous trait which thought to constrain the development of bank is exactly the motivation and sources. Meanwhile, statistic analysis of CITIC Holdings'accounting data is provided.