The Financial Sub-sector, Mixed Choice, And China's Financial Management System

Since 1970's, motivated by the international competition and the needs of developing their own financial industry, the western countries, represented by the United States, Britain and Japan that adopt core banking system have given up the financial administerial system of "core banking and core regulation". Hence, there came up the developing trend of "universal banking and unified regulation" in the global financial industry. As the case may be, China's financial industry is urged to melt itself into the global financial market after the accession to WTO. Based upon the study of the vicissitude from core banking to universal banking and their market and theory background, the paper is intending to discuss and analyze the systematical contradiction and needs for universal banking in China's financial industry development. Moreover, it attempts to bring up the reform orientation and some ideas that are in line with the present situation in China and in addition state the development and significance of the financial holding conglomerates in China.There are five chapters in this paper. The first chapter focuses on the analysis and expatiation of the vicissitude from core banking to universal banking and their market and theory background. Then it demonstrates that universal banking is an inevitable trend.The second chapter emphasizes the theoretical analysis on core banking and universal banking from different angles. Based upon the development of international economy and finance in the past few decades, this chapter analyzes the systematic limitation of core banking in restricting the development of financial industry, lowering the market efficiency and increasing the social cost. The second part of this chapter analyzes the cost of core banking and universal banking and three theories explaining the choice between core banking and universal banking. Following this, it further exposes the essence of evolution from core banking system to universal banking system.After the theoretical analysis, the third chapter turns to analyze and discuss the present financial operational and regulatory system in China. Studying the development path and background of China's financial operational system, this chapter highlights the relations between the development of financial system and the reform progress of economic system in China In the later part, an analysis is given to the structure of China's financial operational system and the contradictions hidden in it. On one hand, the establishment of core banking system is demanded by the development of China's financial system. On the other hand, viewing from the present situation and the long-term development of China's financial market, we see that the risks caused by core banking and the disadvantages dealing with competitions worldwide have come to the surface.The forth chapter discusses the reform and development of China's financial operational and regulatory systems from the viewpoint of their long-term healthy development. First of all, this chapter states the significance to China's financial industry of progressing into universal banking through analysis on the various requirements by the development of China's financial industry. Furthermore, it analyzes the advantageous environments and conditions developing universal banking. Given the statement above, this chapter begins to discuss the development of universalbanking in China and its system arrangement. Firstly, the financial holding conglomerates is the feasible mode of China's adopting universal banking. Secondly, China's developing universal banking will have to experience three stages, namely extending under the present system, releasing core-banking supervision in chosen units and full-scale transition. Thirdly, in order to carry out the reform to universal banking, China is in need of perfecting jural supervision, expediting construction of main market strength and other preparations on an all-round basis.The fifth chapter analyzes the financial holding conglomerates mode which is the ma...