The Research Of Developing Investment Bank Business By Commercial Bank In China

In the background of the rapid development of today’s financial industry, China’s financial sector toward the full liberalization of the road external commercial banks in China will become increasingly subject to the threat from foreign universal banks. Growing financial disintermediation, living space, commercial banks had to consider changing the past banking, particular deposit, loan, exchange against traditional business dominate. Therefore, to the urgent need for self-development, pioneering investment banking commercial banks, the overall competitiveness to improve in the context of the gradual opening up of China’s banking industry in order to stand unbeaten; In addition, the study of commercial banks, investment banking, and commercial banks by the sub-operators transition in mixed mode has very important significance, making China’s banking industry and developed economies for the banking system standards. The2007global outbreak of financial crisis, Wall Street, the five investment banks imminent demise, the national financial supervisory authorities and the people began to re-assess the financial mixed operation. So this topic is important.The first section introduces the subject of the commercial banks to carry out investment banking background, and theoretical achievements of domestic and international financial academia, experts and scholars on this issue, but also generally described the research methods of this article, and research ideas and new ideas and inadequate.Many foreign scholars in this field explore the process and its outcome, the tendency is more diverse, such as those on commercial banks, investment banking revenue and efficiency analysis, risk research, cross-business, collaborative analysis. However, most of them voted in favor of commercial banks to carry out investment banking. China’s financial sector is more strict sub-industry business model, domestic economist’s research is still in its infancy, there are four main focus:China’s commercial bank’s carrying out investment banking theoretical exploration of organizational models explore strategies to explore risk management to explore.In this paper, outlook and methodology from the scientific world, and relatively rigorous logical argumentation and analysis, build a theoretical framework. Standardized methods of data analysis use the latest data and case analysis to give appraisal, with the persuasive and reliability.In the second part is to develop the theoretical basis, these three aspects of specific cases, as well as abroad, the development process to study of its necessity, then get the result that the commercial banks’carrying out investment banking is the inevitable trend of development.With the deepening of capital markets and growth in the original tradition of the origin of business (securities issuance and underwriting, securities trading, securities private placement), the investment banking and financial innovation build up a considerable part of the derivatives business (investment advisory and financial advisers. mergers and acquisitions, project finance, venture capital, asset securitization, financial engineering, etc.).Investment banks with commercial banks are two of the most important in the current financial market intermediary structure, a bridge between them are a shortage of funds side and capital surplus side, but investment banks are direct financing of the financial intermediaries, commercial banks is the indirect financing of financial intermediary. They have a significant difference, for example, the investment bank’s profit comes from commissions paid by the customer and the commercial banks is the interest rate differential between deposits and loans, the origin of the investment banking business is securities underwriting and trading by commercial banks deposit and lending services, The main activities of investment banking is in the capital markets and commercial bank is money market, investment banking can not use the balance sheet and commercial banks can.Research achievements on investment banking of Commercial banks are many. the theoretical basis of research in this area include economies of scope, synergies, market competition, asset specificity theory, economies of scale, portfolio, transaction costs. I try to qualitative analysis of the theoretical basis of investment banking revenues of the commercial banks, also with the point of view on costs and risk, discuss the scope of economics, transaction cost theory, and portfolio theory. then according to the selected data on bank asset size change of investment banking relationship with commercial banks in China to carry out the test of significance, in order to study this mixed operation mode, the commercial banks by the advantage of full use of resources to play economies of scale and scope of economic effect, and improve their overall effectiveness. The model selected domestic investment banking to carry out the leader-the ICBC business data for research, the focus of the examination and analysis of the scale of commercial bank assets subject to carry out the impact of the investment banking. The analysis showed that the increase in investment banking revenue will generate economies of scale and scope of the economic effects, so the bank’s assets grow. The empirical analysis also has some limitations, there are hundreds of commercial banks in China and the different characteristics of the business, I analyzed because only a single one bank, the test results may not be accurate, but young for the study of domestic commercial banks in investment banking market, an important representative, and provide some reference for commercial banks to develop investment banking strategy.Foreign commercial banks carry out the main mode of investment banking, financial holding companies and universal banks, the author analyzes the mixed operation of the development path, provides a historical basis for the domestic commercial banks to carry out investment banking. The development of foreign developed economies commercial banks experienced is a mixed business sub-industry-Mixed mode. Mixing into sub-industry is excessive guard against financial liberalization and pose a significant risk, but in the end. the financial model of developed countries by the separate regression Mixed conforms to improve the economic resources utilization efficiency, profitability and for financial liberalization moderate development and prosperity needs. Therefore, mixed mode referenced is the deepening reform of China’s financial development model of China’s commercial banks destination.The third part analyzes the current situation of China’s commercial banks carrying out investment banking. With the deepening of domestic financial sub-industry business model increasingly constrained financial intennediation efficiency and institutional profitability, limiting the banking industry, securities industry, the three financial pillars of the insurance industry to grow and develop. In July2002. the central bank issued the Interim Provisions of the "intermediary business, the provisions of the approved commercial banks, permitted to other than investment banking, underwriting, proprietary trading, which marks the commercial banks to carry out investment banking, and policy support, the domestic financial industry control also gradually open. According to Article43of the regulations of the Law on Commercial Banks in China:"commercial banks in China should not engage in trust、investment and securities business, not either non-bank financial institutions and corporate investment. Description of the German universal banking model does not work in the country, can not be founded operating financial holding company. However, does not prohibit purely financial holding company, to provide development space for the comprehensive management of financial innovation.China’s commercial banks to carry out investment banking have realistic feasibility and necessity, in line with the separation of the financial industry-the changing needs of mixed operation mode, and enhance the comprehensive competitiveness of the commercial banks, also to conform to the inner link of the monetary and capital markets. However, China’s commercial banks to carry out the investment banking also encountered some problems, including:existing laws and regulations constrain.In the fourth part describes the U.S. sub-prime mortgage crisis and its revelation of China’s commercial banks’ carrying out investment banking. Draw the lessons of unfavorable U.S. regulators, China investment banking at the same time in advance of the commercial banks continuing to emerge in investment banking, financial product innovation, timely and accurate adjustment related to financial supervision is essential. A tight financial regulatory system should be established to monitor the increasingly complex financial markets,China’s financial industry has long been separate operation, the internal integrated business model in the longer period of time for the investment banking model. China’s existing laws and regulations do not allow trust, investment and securities business, which limits the scope of the investment banking business, which restricts funding the improvement of operational efficiency, and it not conducive to commercial banks to the large-scale, comprehensive, international. At the same time, the domestic financial mixed operation is the trend, the Bank Group mode will gradually replace the internal integrated business model.Meanwhile, the author is proposed the following observations of its development,External supervision of the domestic investment banking should be to focus on legislative regulatory regime, supplemented by self-discipline type, so that:1) the risk of supervised original compliance regulation.2) strict implementation of market entry and exit mechanisms.3) Excellent introductions of foreign capital regulation to improve the business regulatory requirements of the OTC market.4) Strengthening the management and supervision of commercial banks in corporate governance. Under the business’s development, risk management should establish a sound internal risk control mechanism:to strengthen the management of internal funds of commercial banks should comply with the business process flow and requirements. In addition, to control and post-processing prior warning of the risk of commercial banks, things need to be strengthened to improve internal risk control capability of the commercial banks of carrying out investment banking.