China's Financial Industry Business Model Is A Comparative Study

Great research has been made on the choice of the operation business pattern of a country's financial industry. It is held that the operation risk is the focus of the divided-operation business pattern versus the multi-operation business pattern, and the operation risk is the cause of their debate. After analyzing the advantages and disadvantages of both patterns, the result shows that there is no definite conclusion on the superiority of either pattern.With the collapse of the Bretton Woods system and the tremendous development in the non-banking financial services including futures and options and especially with financial liberalization and economic globalization, many countries have made conclusion that the divided-operation pattern, while safeguarding financial stability, has also unpleasant consequences.A loosely defined multi-line business was carried out in our financial industry before 93.At the initial stage of the Chinese securities market, the banks played a vital role in supplying capital, technique, personnel as well as organization and administration. Due to the financial sequences confusion from 92 to 93,however,the authority decided to divide business in the financial industry in order to break the linkage of funds between the banks and security companies. Nowadays in the new global climate, as far as the new tendency of the domestic financial industry is concerned, a tendency of business cooperation among financial institutions is increasingly obvious. Meantime the scope and pattern of co-operation also tend to be diversified.By observing the evolvement of China's financial system, and studying international and domestic factors, we believe the trend toward multi-operation business pattern of China's financial industry cannot be held back. And After analyzing the advantages and disadvantages of three different multi-business patterns, the author holds that the financial holding company is the practical choice for the transition from divided-operation to multi-operation pattern in China.The risk is always the focus of the debate between divided-operation business and multi-operation business. Perfect internal control should be based on the characteristic and potential risks of financial holding companies and should establish an all-inclusive risks prevention system , which includes external supervision by the supervisory authorities. So that the objectives of "efficiency, transparency , legality " can be achieved.At the end of this article, the author presents some political advice on the transition of the style of eternal supervision system, including strengthen a core and realize five transitions.