On The Mixed Operation Of Bank Insurance System

Since 1970's, the mixture run model of financial circles has selected and used by many West Countries. The "financial conglomerate" groups consisting of banks, insurance companies, securities firms have highly competitive in world financial market. Now, China has been one of the members of World Trade Organization (WTO), which has led to the outlook that challenges the Chinese financial press. Our financial firms are going to compete with the international financial entities that have the advantages of integrated operation, with gradually abolishing protective policy. However the financial press in China is still kept functioning in division. It will be in an unfavorable competition condition while we have complied with our promise to open our financial market. To be survival in the international competition, our financial institutions and system are bound to carry out reform. So it is considerably necessary for us to understand the key to the financial enterprises transforming from the separate run to the mixture, and also hope to get some helpful enlightenment for our financial reform. This is the purpose of my paper.The paper is organized in introduction and four chapters.The introduction provides the theoretic foundation on which my discussion is based, including the definitions and characteristics of institution, institution evolution, innovation, institution innovation, financial innovation, financial institution, financial institution innovation. With the author's view, the mixture run model and separate run model of financial circle both are financial institution, and the transform between them is institution evolution or financial institution innovation. The purpose of my research is introduced in this part, too. It is clear that the research is focused on banks and insurance companies (not include securities firms), limited by my little talent and less learning.In chapter one, I believe the transform process between the mixture and the separate run model is fairly important. It is the starting point ofthe research. So I review the transform process in US, Japan, UK and Germany, and summarize the features of each mixture run model.In chapter two, it explains the reason why the West countries have taken the mixture run model. Is the mixture run model for sure better than the separate run model? The answers of these questions play a decisive role for policy-making. The reasons given in the paper as follows: ⑴economic ideal of new liberalism; ⑵the promotion by new technology innovation; ⑶the exorbitant profit sought by financial corporations; ⑷disperse risk and powerful regulation; ⑸meeting the consumers' demands with general service; ⑹the affection by the forces of globalization of business. In fact it is rather difficult to judge which one is simply superior and to select one type financial operation institution. The separate run model is good for risk-controlled, but it is harmful to improve efficiency. The mixture run model is the reverse side of that. Then the choice is due to risk-efficiency substitution in a given condition of economy and finance. A country should choose the financial institute, which is fit for its objective conditions.Chapter three discusses some problems of financial supervision. Financial supervision is the most important strength to keep order of financial industry. In the last few years a number of industrialized countries have moved to integrate different supervisory functions (including for the banking, securities, and insurance sectors) in a single agency. The Scandinavian countries (Denmark, Norway and Sweden) and UK have been the typical examples. The rationale for integrated supervision has two limbs. First of all, integrated supervision would permit more effective supervision of financial conglomerates. Secondly, the merger would also permit economies of scale and scope to be obtained in regulation, especially better leverage of resources in administration and infrastructure support. Their experiences give the implications for developing and t...