Studies On The Operation Mode Of Financial Holding Companies

In the development of economy globalization today, there is unavoidable trend for financial institutes to have complex operation. This is also the future direction of Chinese financial industry. A complex Financial Holding Company (FHC) has characteristics of effective organization. In terms of economies of scale and scope of business area, as well as synergies effect such as risk diversification. FHC has unbeatable advantages compared with other form of financial institutions.This paper would be based on the business model of Chinese financial holding company as entry point for the study. This would combine with business management theories and practices. The study would be based on standardize and empirical research methods through the comparison of mode of operation, efficient and diversification of risk among the FHC in the United States, British and Germany. The research would explain the current problems existing in the operation of FHC in China. It would raise the purely financial institutes is the targeted business mode of Chinese FHC. It would have brief discussion on structuring and the improvement of targeted mode of business in FHC.This article is divided into five chapters: Chapter I firstly defined the concept of financial holding company and analysis of the advantages of FHC and operational risks. It also explains the main categories. Chapter II analyzes the formation of FHC in the United States, British and Germany. Actual business cases would be used to analyze the characteristics of the business model. Chapter III analyze the criteria of selection for operational mode in terms of pre-condition, operational efficiency and risks. It compares and makes conclusions for three different FHC business models in use of the said criteria and the effect by those elements. The development of FHC in those countries would be the experience and enlightenment for China. Chapter IV describes the present situation of FHC in China and analyzes the main problems in operation mode. Chapter V proves a purely Financial Institute is the best development of business model in China based on the current national conditions. Constructive suggestions are quoted for the construction and improvement of the said Financial Institutes.