Research About Transformation To Mixed Operation For Commercial Banks In China

From the sight of commercial banks in China, separate operation will not satisfy their development requirements any more in such a situation where integration of global economy and innovation of finance and technology perform as driving force to expand and maximize the profits. Apart from that, the profound changes in current operation environment, downturn of economy, liberalization of interest rate, rise of internet finance, development of capital market and open market access also contribute to the challenges encountered by commercial banks under separate operation models. Under such circumstance, the discussion about transformation to mixed operation will become heated among the commercial banks in China in the coming future.In this paper, related references about commercial banks under mixed operation are presented systematically, indicating that mixed operation is an operation model in which the business are crossing-connected with each other among commercial banks, security companies, trust companies and other finance companies, resulting in integration of finance transactions. Besides, related foundation theories and research achievements made by scholars from home and abroad are also concluded, as the theoretical supporting to this paper.Based on the topic of transformation to mixed operation, the current situation of commercial banks under separate operation is analyzed in this dissertation. From theoretical aspect, fourteen listed banks are selected as subjects, whose core indexes of profitability, security, growth and creativity are analyzed. From this research, the problems, resulting from separate operation, of relatively limited revenue channels, increasing capital pressure, tight liquidity status which is difficult to be changed fundamentally, fierce homogenization competition among commercial banks and weak financial innovation have been exposed and these problems have already confined the development of commercial banks. Additionally, the main factors which influence the transformation to mixed operation are analyzed in this paper, including liberalization of interest rates, rise of internet finance and financial disintermediation. These factors put huge pressure on commercial banks, forcing them to transfer to mixed operation. Based on above discussion, transition to mixed operation is internal demand from commercial banks in China.From empirical side, data envelopment analysis (DEA) is introduced, combined with principal components analysis (PCA), to evaluate the overall efficiency of commercial banks from the angle of input and output. This method can avoid the mistakes that information reflected by sample data may overlaps. It is obvious that listed banks characterized by features of financial holding companies perform better than the other listed companies in term of the level of technology efficiency and scale efficiency. Simultaneously, the overall efficiency of state-owned commercial banks is evidently higher than that of joint-equity commercial banks and urban commercial banks. However, compared with state-owned commercial banks, joint-equity commercial banks and urban commercial banks have strong ability and initiative to innovate. Generally, most of commercial banks in China still have significant space to make progress not only in pure technology efficiency but also in scale efficiency, which serves as supporting to the transformation from separate operation to mixed operation.Simultaneously, three typical mixed operation models are analyzed in details, which is financial holding company in the United State, Universal banking in German and bank holding company in United Kingdom. The forming background, organization structure and corresponding advantages and disadvantages are discussed in this dissertation. Commercial banks in China are able to draw inspiration from the conclusion above.Based on above analysis, for commercial banks in China, financial holding company is a realistic and inevitable choice to realize transition to mixed operation. The step-by-step transition model is also proposed, including model choosing, implementing and constructing. Meanwhile, a matched regulatory system with Chinese characteristics should be established. Subsequently, the plan design and research for transition to mixed operation can be finished.