Study On The Risks Of Mixed Operation Of Commercial Banks In China

Mixed operation in commercial banks in western developed countrieshas been in existence for a long time, it is born from a highly developedmarket economy. Mixed operation will improve the level of profitabilityof commercial banks on one hand, while increase the risk of commercialbanks could face on the other hand. With the development of our economy,our government according to the situation relaxed restrictions on thefield of commercial banks, and commercial banks in China in recent yearsbegin to get involved in mixed operation. In this case, contrast domesticand international universal banking environment and related policy, andanalyse the potential risks in China banking will has an importantrealistic significance in helping China’s commercial banks in the futureto do better to carry out the mixed operation.This paper firstly introduces the concept and theory of mixedoperation in commercial banking as well as the types of risks thatcommercial banks may face when they start the mixed operation. Combinedwith China’s realities, this paper briefly describes the conditions ofthe promotion of mixed operation, and the steps should have taken to finishthis job, as well as the current situation of mixed operation of Chinesecommercial banks. Then this paper takes Bank of China Limited for exampleto illustrate the status of China’s commercial banks in carrying out mixedoperation.In the subsequent section, the paper focuses on the business ofuniversal banking risks causes, analysis of the potential risks ofcommercial banks may face when joint with securities, insurance and fundby category, and take the CITIC Group as an example to analyse the potential risks of the mixed operation in the form of a financial holdingcompany. In addition, the analysis of new problems at this stage ofChina’s commercial banks to carry out mixed operations may face, includingpost-crisis era of Basel II/Ⅲ on commercial banks, interest ratefluctuations in China’s commercial banks. And systemic risks thatcommercial banks in China may face is also an important part of thissection.In the next section, this paper proposes a strategy to deal with therisk of mixed operation, ranging from not only the traditional way, butalso expecting new ideas to spread the risks by the virtue of China’sgrowing economic strength. Traditional coping is to strengthensupervision, while the new ideas to response to the risks, you can usethe export of capital and offshore markets to diversify risk.Finally, therelevant departments corresponding policies are also recommended in thispaper.