Selection Of The Operating System In China's Financial Industry

This paper discusses the selection of the financial operation system. Due to the role of financial industry on the economic development, it is of vital importance to select the operation of the financial system. Therefore how to choose between the separated and mixed operation system is not only a key problem in the development of financial industry but also a heated question disputed in the theoretical field. There have several theories about it such as hypothesis of risk and efficiency, hypothesis of supply and demand of system transformation, hypothesis of asset specificity, which form the fundamentals for t he se lection. Based on the cost-benefit analysis of the financial operation system, it shows that the mixed operation system will progressively substitute for the separated one, and the former will be the trend.We review the practice of international finance on the choice of financial operation system, especially the history and the process of Germany, US and Japan, and the history shows the separated operation system is just an emergency measure made by government. In fact only the mixed one is the necessary demand for institution and it is the necessary choice. And it is very significant for the choice of china's operation system to get experience for reference.Nowadays, China's financial industry as a whole carries out the separated operation system. It promotes the development of China's financial industry to a certain extent, but it also does harm to the competitive ability of Chinese financial setups. To develop China's financial industry and to improve it's competitive ability, it is an urgent need for China to bring into effect the mixed operation system. Therefore, t hrough u se o f t he e xperience o f w estern c ountries a nd analysis o f o ur present situation, this paper points out that the model of financial holding company of mixed business operation is suitable to China's Reality, and suggests that China's financial industry should take the strategy of working towards the mixed operation system, and to make the related reform on financial supervision.