The Development And Performance Analysis Of Chinese Banks Financial Holding Company Background

With the full liberalization of financial markets, China’s commercial banks face intense competition and the severe challenges with Integrated Financial Groups which can provide full-service in developed countries. Explore moderate conglomeratization organizational model is real and urgent for China’s commercial banks.Combination of China’s commercial banks to gradually participate in the mixed operation practices and the issuance of economic and financial policies by regulators in recent years, we can see the regulators relaxed the restrictions of part of the financial business mix industry, at the policy level, China has basically breaking business barriers between the banking, securities and insurance industry, the trend of financial mixed operation is coming. The financial holding company model between the separate operation and mixed operation mode taking into account the efficiency and stability, but also adapt our separation of business and the separate supervision of the financial environment. Although China is not yet clear financial holding company status, but the prototype of the financial holding company in China has made some progress, especially in a growing number of commercial banks are speeding up the process of financial holding companies. So, whether in theory or in reality, the financial holding company’s operating and organizational model is the ideal choice for China’s commercial banks into the mixed operation stage.Banks financial holding company background have the advantages of economies of scale compared with the banks of professional management. Financial assets have greater homogeneity and easy conversion between different financial sector, which promote the realization of economies of scale. The fixed costs are allocated to a wider range of products, reducing the average cost. Banks financial holding company background take advantage of the platform of parent holding company, which can merge or set up new subsidiaries of the holding such as securities, insurance business, to mixed operations. The larger relevance and complementarity between the financial business can also promote the expansion of bank size and the effects of economies of scale.Banks financial holding company background have the advantages of economies of scope compared with the banks of professional management. When banks financial holding company background engaged in deposit and lending and other traditional business, they can share all kinds of information with other subsidiaries within the group, which save the cost of information searching and transaction and realize the full flow of information and resource sharing. At the same time, due to the presence of reputation spillover effects, the banks financial holding company background can also provide customers with "one-stop" financial services when providing banking services, insurance, securities, etc. Cross-selling saves costs, increases revenue, and promotes the effects of economies of scope.Banks financial holding company background have integrated synergistic advantages compared with the bank of professional management. Whether it is as the group parent or as a subsidiary of group, bank financial holding company background access to a variety of synergies through business integration and resource strengths,which improve the operational efficiency. Specifically, the integration synergies of the banks financial holding company background include the management synergies, operating synergies and financial synergies. Since the banks financial holding company background having these business advantages and financial holding company model is the future direction of China’s commercial banks, then it is particularly important to research whether the business advantages are played in the banks financial holding company background existing in china.Through comprehensive comparison to domestic and foreign scholars on the method of performance evaluation of the commercial banks, the paper selected eleven financial Indicators including average total return on assets, profit margin of income, basic earnings per share, per capita net profit, non-performing loan ratio and provision coverage ratio, capital adequacy ratio, loan to deposit ratio, equity multiplier, the deposit growth rate, the loan growth rate. Through the method of factor analysis, the paper compares the performance of the banks financial holding company background and the banks professional management. The paper obtain the following conclusions according to the empirical results:(1)The earnings of the banks financial holding company background are significantly better than the banks professional management. Economies of scale, economies of scope and synergies played in a certain role.(2)However, if the earnings dilutive to earnings per share and per employee, the profit on that unit profit factor of the banks financial holding company background differ is slight different from the banks professional management. This may be because the establishment of financial holding companies did not effectively integrate relevant, resulting in redundant and difficult to coordinate the subsidiaries having complex equities.(3)The business growth of the larger banks financial holding company background are significantly higher than the small-scale banks financial holding company background, but their safety factor scores generally without the latter. The larger banks financial holding background play too much emphasis on business growth while ignore the risk prevention, which is also the important reason of the lower operating performance.(4)By the weighted average of Income factor, the unit profit factor, growth factors, the safety factor get the comprehensive performance factor, which the weight is their variance contribution rate in the total contribution. The overall performance of smaller banks financial holding company background are slightly better than the banks professional management, but the performance of larger banks financial holding company background below the banks professional management mainly due to the low safety factor scores.The first chapter is the introduction, which includes the background and significance of research, the domestic and international literature review on the banks financial holding company background, the structure of this paper, research methods, innovation and inadequate.; The second chapter describes the development of the financial holding companies in China and proposes the downfall of the hair of the Industrial Department of the Financial Holding Company, financial holding company is the best carrier of China’s commercial banks to achieve mixed operation; The third chapter analyzes the banks financial holding company background have economies of scale, economies of scope, synergies; Chapter IV uses factor analysis in comparing the performance of the banks financial holding company background and the banks professional management; the fifth chapter, on the basis of empirical analysis, recommends strengthen the integration, the risk prevention, issue legislative norms, and strengthen supervision to improve the performance of the banks financial holding company background.The innovations of this paper are:(1)Sort out and integrate the definition of domestic and foreign financial holding company, combined with the development of the financial holding company practices and the issuing of economic and financial policies, the paper proposes organizational model of the financial holding company is the best choice for China’s commercial banks at this stage to achieve mixed operation.(2)Through comprehensive comparison to domestic and foreign scholars on the method of performance evaluation of the commercial banks, the paper selects eleven financial indicators and uses factor analysis method to compare the banks’ business performance, and on the basis of scores of each factor, the paper analyzes the ranking of the two types of banks combined the economic theories.The inadequacy of this paper is that further analysis on the impact of the financial indicators for comprehensive performance is not done.