A Study On The Effective Supervision Mode Of Financial Holding Company In China

Past two decades, the international financial markets can be said to have undergone dramatic changes.Economic globalization and financial integration are irresistible, so that an integrated operation has become an leading trend of international financial industry. Because of the development of financial liberalization and innovation, and improvement of information technology, the boundary of the bank, security, and insurance sector on a globe is blurry. It promotes the formation of comprehensive financial institutions.As an innovative form of organization, financial holding company is able to integrate banks, insurances, securities, trusts and other business.These subsidiaries co-operate to obtain synergies, reduce costs, increase profits, improve assets and liabilities management efficiency, and achieve economies of scale and scope of the economic.In the United States, Japan, Britain and other major market economy countries, financial holding companies become the mainstream of the new organizational model.At present, China is still in the framework of "separate operation, separate regulation".In order to comply with the international trend of comprehensive management, and deal with domestic financial industry's need for sustained and rapid development, the strict separate operation systems were found a little flexible. There are some practitioners with characteristics of a financial holding company, such as CITIC, Everbright. However, due to lack of clear legal norms, the corresponding regulatory system lags behind the financial practices.It makes the development of these financial holding companies are more chaotic. China's regulatory agencies are faced with lots of difficulties and challenges. To maintain financial system stability, and promote the healthy development of financial holding companies, we must pay close attention to research for the development of China's financial holding company regulatory system and supervisory.The purpose of this research lies in analyzing the shortcomings of our existing regulatory approach, with the experience and lessons of other countries, more importantly, taking China's specific national conditions into consideration. And further advance the optimal mode and path selection to conduct effective supervision of financial holding company in China. I Hope to rise more attention from other scholars on the supervision of the financial holding company, and seek a deeper exploration, innovation and development of this topic. The main context of this paper is composed of four parts.Chapter 1 is introductory,briefly describing the research background and significance,outlining the theoretical basis for financial regulation model, namely, continuous development and improvement of the theory of financial regulation, and explaining the research methods and the logical of this paper.Chapter 2 first lists different types of regulatory models, and summarized the previous people's contributions, and then compares the development of financial holding companies in the United States and Britain, at last analyzes two typical supervision models——umbrella supervision model of the United States and the integrated supervision mode in British,hoping providing reference and supervision for the development of China's financial holding company.Chapter 3 mainly describes the development of China's financial holding company status.It tells us the existing four types and representatives of China's financial holding companies, the corresponding features and advantages, may faced risks and challenges posed by the monitoring.Chapter 4 firstly generalizes and evaluates the current situation of China's regulation on financial holding company, and explains the cause of need for reform of business supervision. Then this chapter advanced to make a "gradual" transition to solve this problem. That is, to build the People's Bank-led umbrella regulatory mode in the short time, and try to gradually transit it into integrated supervision mode, when conditions are ripe. Finally it mentions some ideas and recommendations of building effective regulation on China's financial holding company.The main ideas and innovations in this paper are:(1)financial supervision mode choice should not only meet the country's financial sector development trends, but also with country-specific financial environment. It should take into account the country's historical and cultural traditions, the government and its capabilities, and even a large number of non-economic factors, such as the bureaucracy, the legal system and so on. We must make dynamic adjustments according to the actual results of institutional changes.(2) financial supervision mode choice is not once for all, but rather a dynamic process of transformation. There does not exist a so-called fixed framework or model for all countries in the same period or all periods of the same country. Therefore, our country cannot completely copy an existing model of abroad. Only according to its own historical conditions, socio-economic development levels,the degree of the financial system structure and the extent of universal banking, can it be appropriate and effective for China to selects and establishes the regulatory system with Chinese characteristics.(3) Although a integrated regulation is the financial holding company's trend, but due to various practical constraints, it does not mean that this model can be achieved overnight. China needs sufficient time to finish the "gradual" conversion. Well, according to China's current economic development and regulatory level, it is a viable means to establish the People's Bank-led umbrella regulatory model in the short term.The model will enable the PBC to implement unified supervision to guard against systemic risks.It is conducive to coordinated regulation on the basis of encouraging competition and regulation innovation, and of avoiding creating a monopoly regulation. However, with the development of financial holding companies, the lead regulatory model of will gradually appear some disadvantage in supervision and coordination, information sharing and regulatory efficiency. In order to meet the regulatory needs of more efficient, regulatory approach. Compared with separate supervision mode, the integrated model shows the biggest advantages of a high degree of cooperation and flexibility. It will be the ultimate goal of China supervision on financial holding company.