Research On The Supervision Of China Financial Holding Company

Since 1980s, deregulation and liberalization have become a tendency in the financial industry in the world. Financial joint operation becomes more and more popular. In this process, Financial Holding Company (FHC) gradually becomes the main form of financial joint operation, owing to its many advantages. Meanwhile, risks such as risk of capital inadequacy,risk transferring deriving from this special operation form draw more attention of the financial supervision authority. China is not an exception. Many FHCs appear. Generally speaking, these FHCs can be classified into three categories: FHC built by banking institutions,non- banking institutions and non-financial institutions. In china, it is especially important for us to discuss the supervision towards financial holding companies, because some failure cases of FHC have drawn our attention. On the other hand, compared with the overseas FHCs, the domestic FHCs just stand at their beginning and are generally non- standard. So this paper will focus on discussing the supervision on china FHCs. Four chapters consist of this paper:The first chapter provides the paper with the theoretical foundation. Firstly, the definition of FHC is discussed. This paper will try to offer the special definition for china FHC. Then we discuss the general theory of financial supervision and the special supervision theories towards FHCs. The last part in this chapter gives a detailed introduction to the theory about financial supervising model, which is directly related to select the main supervisor for FHCs.The second chapter focuses on the china FHCs including their present condition,characters,risks and shortcomings. These discussions are important, because a good supervision structure can be devised on the basis of knowing clearly the regulating objects. There are many risks deriving from China FHCs. These risks put forward with challenges for our present financial regulation arrangement. The third chapter pays more attention to what should be carefully regulated for China FHCs. Generally, the supervision authority should focus on three aspects: the access to market including the business access and personnel access,the business operation and the quit of FHCs.The fourth chapter discusses how to select a suitable supervisor for China FHCs. In order to draw a right conclusion, this paper will firstly throws attention to the international supervision experiences. Japan,England and the U.S.A are our target countries. We will examine closely how these countries select the proper supervisors for their FHCs respectively. These countries all make a necessary change towards their supervision structures in order that such regulating structures can be fit for the development of FHCs. Then this paper makes a try to devise our supervision arrangement.The contribution and innovation of this paper have two aspects as follows. Firstly, it is not clear that whether or not the appearance of FHC in china increases the financial risk, because the different risks relating to FHCs do interact each other. On one hand, some risks are offset; on the other hand, some new and special risks are born from the interaction. Secondly, this paper mentions that we can not simply copy the supervision model of the advanced countries. The reform of financial regulating structure must eye on china special financial history and present condition.