On The External Control Business Risks Of Financial Holding Companies

Since 70's in 20 centuries, financial innovation pile up one after another. A lot of developed nations release successively financial supervision. Financial liberalism tide rolls up the world and the modern financial system is taking place the deep variety. In 1999, the U.S. Congress passed《Finance Service Modernized Act》. On the foundation of the original bank holding company, that Act put forward the concept of Financial Holding Company (FHC). Though FHC have the advantage of economies of scale and economies of scope, it also brings a series of new problems and risks. How to control these risks is a new challenge to us. In our country, since competition in domestic and overseas financial field becoming drastic, progress of science technique and absence of related laws, FHC also presented different appearance in our country. Especially, FHC controlled by business enterprise groups develop quickly. This kind of FHC makes use of the financial capital to serve for the industry and business enterprise. This will make risk of the FHC larger. Most FHC have not yet been pay attention to enough by authorities of our country. The risks brought by FHC The recognition group turns the new risk that business model bring, not only will obstruct healthy development of the local FHC, but also to the financial safety of our country is extremely disadvantageous. And our country has already joined WTO, we must implement to the promise to WTO. It can't avoid being in line with international financial markets. More FHC will appear in our country. So in present stage of our country, according to authorities of our country, how to control the risks brought by indigenous FHC in our country has important and realistic meaning. Exactly these antinomies and needs cause me to research this topic. There are four Chapters in my thesis: In Chapters 1, I define the concept of holding company in section 1 first. Secondly I distinguish the concept of financial group and FHC, enumerate relevant international organizations', nations' and domestic scholar's definition to FHC. According to the domestic and international definition, I consider that we should comprehend the definition of FHC from two layers of broad sense and narrow sense. The FHC that this thesis point to means FHC in broad sense. Then in section 2,I analyzed the management characteristics of FHC, namely economies of scale and economies of scope. In Chapter 2, I discuss the business management risk of the FHC. At the foundation of chapter 1 I first define the concept of the risk. Then I define Intra-group transaction risk, benefits conflict with customer risk and capital calculated repeatedly risk. Then I analyze these performance and negative influences of three kinds of the business management risks, Moreover I raise correlation the case example of financial crisis in 1994, pointing out that Intra-group transaction risk causes the risk deliver the effect and the confidence effects, which will cause financial system risk become extend doubly, even cause the financial crisis. I also analyze the international case examples of the benefits conflict with customer risk. And in allusion to capital calculated repeatedly risk I Point out that the repetition usage of the capital will overrate capital, which connotatively contain the huge risk. In Chapter 3,I mainly elaborate how to control the FHC business management risks from the exterior. From the foundation of chapter 2 ,we know there are three outstanding business management risks, If lack the control to these risks, the risk delivers may result in tremendous bane for financial system, even affecting one country economy and the stability of the politicses. How to control the three kinds of FHC business management risks is very necessary. So I analyze to the exterior control about these risks, passing to tally up some nations (regions) to theconstitution, then summary how to carry on the exterior control to the FHC business management risks. In Chapter 4, I analyze how to control the native FHC business management risks. First I...