A Study Of The Financial Function And Its Efficiency Of Captive Finance Companies In China

After the reform and opening in China, both Chinese economic aggregate and the growth ratio have reached an amazing level. At the same time, the financial market is also improved, with the enterprises' financial demands tending to be more diversified. During the past several decades, the destruction for the market of Chinese captive financial companies has made a great progress. However, with the pattern the enterprise groups more and more diversified and the economic environment more uncertain, Chinese captive financial companies will face a more huge challenge in the following years. The most critical challenge is the position of the financial function of the captive financial companies in China. The ambiguity of the financial function position will lead to the mismatch for the supervision policy and a negative effect on the efficiency of the financial function. This paper aims to study the theories in this field. And based on this, explore the historical evolution of the captive financial companies' financial functions. Then based on some historical data, we empirically analyze the efficiency of financial function in China.This paper has 5 sections. The first section is the research background and some literature review. In this section, we conclude the research background and significance, research status of this study. In section second we explore the relative theories in this field, including the capital market theory, theory of financial intermediation and the Industry Combination Theory. In section three we explore the historical evolution of Chinese captive financial companies' financial functions. Section four is the empirical analysis, using the improving DEA model. And the section five is the conclusion part, and proposer some suggestions from the regulatory authority, peer industry and the captive financial companies.