Research On Debt Creation And Risk Contagion Of My Country's Financial Holding Companies

With the approach of the global mixed wave and the accelerating financial liberalization and innovation,the financial institutions under the separate operating system in China are facing internal and external troubles with increasingly fierce competition,and the marginal profits are lower.Financial holding companies have the natural advantage of realizing the transition from separate operations to integrated operations,providing a feasible way for the sustainable development of financial institutions.Since 2002,China's financial holding company has rapidly developed into a"super financial supermarket" integrating financial and physical industries,providing diversified financial support for the physical industry.However,risks and opportunities coexist.Financial institutions have neglected the crisis of risk contagion within the process of blindly establishing a financial control platform.Unfair transactions between members of the group cover up real capital flows and debt levels,and the possibility of high debt leverage operations leading to systemic financial risks increases,especially the shadow banking operations of financial holding companies show great contagious.In the absence of an effective "firewall" setting,the risks of individual companies are easily contagious and spread within the group,resulting in the collapse of the entire group and even systemic financial risks.On this basis,this paper analyzes the problem of debt creation and risk contagion within financial holding companies from the perspective of debt pyramid structure.This paper first reviews the research perspectives of financial holding companies in recent years.Most of the research focuses on the business performance of financial holding companies,and then analyzes the operating advantages and risks of financial holding companies.These studies affirmed the synergies and financial risks of financial holding companies.They also pointed out that financial leverage,internal related transactions,and risk contagion are also difficult to avoid.However,they focus more on phenomenon descriptions and empirical tests,and do not reveal the nature of financial holding companies and the inherent mechanisms of risk contagion.Based on this,the article analyzes the development status of China's financial holding companies and the opportunities and challenges they face.Secondly,based on the debt pyramid structure theory,this paper deeply analyzes the endogenous debt creation and debt "pyramid"expansion accompanying the business activities between financial holding companies'internal banks,NBFIs and non-financial enterprises,and analyzes the internal debt repayment mechanism of the pyramid and reveals The debt-increasing function of financial institutions such as banks explains the essential reasons why large enterprises are keen to form financial holdings.And then,analyze the risk contagion and transfer that accompany the bank's repayment of corporate debt.Finally,based on the above research,this paper proposes targeted policy recommendations to enable financial holding companies to better serve the real economy and achieve healthy and sustainable economic development.This paper believes that the essence of financial holding companies is to continuously create their own debts to meet the real needs of the economy to support their development,thus promoting the effective accumulation of capital.Financial institutions such as banks within the financial holding company play the role of the group's "final lender".In the debt pyramid within the financial holding company,the top-down repayment of high-level debt to low-level debt makes the bank become a financial holding group.Banks play a debt-to-credit function and provide liquidity support to the entire group.This is the root of the company's keen interest in forming a financial holding company.However,the risk of low-level debts in the debt repayment process continues to spread and accumulate in high-level banks,and banks have become the "final bearers" of the group's risks.It can be seen that the financial holding company is a "double-edged sword".Its internal banks provide guarantees for enterprises and play the "final lender" of the group.They also accept the higher risks of non-bank enterprises.And banks have become the "final bearers" of the entire group's risks.