The Study About Mixed Operation Impact On Systemic Financial Risk

Athe crisis allow people to deeply understand the negative effects that financialinstitutions mixed operation operation excessively caused the financial stability. Atthe same time, hedge funds, private equity funds which commercial banks held andinitiated by mergers and acquisitions, equity and controlling in the financial crisis hasalso suffered huge losses and forced the government to spend huge human andfinancial resources to be relief. We can say that the crisis to some extent can beconsidered to a certain degree as a potential risk of mixed operation concentratedoutbreak. Nevertheless, from a practical point of view after the crisis, mixed operationoperation is still trends of the international financial sector. Since March2006,“Eleventh Five-Year Plan”put forward clearly “steady progress consolidatedoperating pilot in the financial sector”, the consolidated operating of the financialsector has taken shape. Under domestic and international background, very necessaryto study the impact on financial institutions mixed operation systemic financial risks.First, the paper describes the mechanism of mixed operation impacting onsystemic financial risks. Put forward the theory that mixed operation impact onsystemic financial risk: Moderate mixed operation help to reduce systemic risk offinancial institutions, excessive mixed operation will exacerbate systemic risk offinancial institutions.Then，empirical analysis that mixed operation impacting on systemic financialrisks, build the nonlinear panel model about mixed operation operation and systemicfinancial risks, use the marginal expected loss method calculating systemic financialrisks,and use the Herfindahl index representing mixed operation extent, use theHerfindahl index quadratic term reflecting nonlinear effects. Studies have shown that:the relationship between the degree of mixed operation and systemic financial risksshows a "U-type" feature, namely the existence of a threshold between the degree ofMixed operation and systemic financial risks, when the degree of financialinstitutions Mixed exceeds threshold, will cause increase systemic financial risks.This is consistent with the theory put forward earlier.Finally, the paper summarizes the experience of reform in post-crisis countriesmixed operation based on systemic risk prevention, and combined with empiricalresults, for the stage of China’s financial industry mixed operation, propose related conceive about steadily pushing forward mixed operation system: Firstly, should bebased on China’s existing laws and regulations, learned the countries of Europe andAmerica mixed operation legislative norms and the lessons operation development inEurope and America mixed operation, modific and improve of the current regulations,norm Mixed operation of Chinese financial sector. Secondly, the organizational modelcan reference to financial holding company model, when the conditions are ripe tovarious aspects, can implement universal banking model. Finally, should buildregulatory mechanism that match mixed operation from regulatory framework,regulatory coordination mechanisms, regulatory capacity.