Convergence Of Financial Services And Financial Supervision

In the last ten years of 20^th century, most of the developed countries give up restriction on the mixed operation of financial services and lead to the wave convergence of financial services industry. This wave not only changes the providing of the financial institutions, but also brings the change and innovation of financial supervisory mechanism, and leads to different formation of supervisory mechanism model. In this trend, TaiWan region issued the Financial Holding Company Act and put it in practice in 2001, which means that TaiWan stepped into the convergent financial services era.This paper analyzed the relations between the convergent financial services and the financial supervision in a theortical and practical way, and then analyzed the convergent financial services and supervisory reform process of TaiWan with a positive method. All of the research is to draw some conclusions and to the references for Chian mainland's reform.Firstly, paper uses the financial efficiency as the key notion and the cost-benefit analysis method and the financial supervision function as the tools. With those method, paper analyze the intrinsic relation between the convergent financial services and the financial supervision, which is the theoritical basis for the paratice. And then, from the different countries's practice of convergent financial services, paper summed up a few models about operation and supervision of convergent financial services. All those practice could be the experiences for other countries. Lastly, we do a research on the Taiwan's reform process of financial services convergence and financial supervision. We also compared the financial holding company and none financial holding company's performance in two phases: before or after the reform. From which, we can know the financial services convergence micro-performance and the gain or loss of financial supervision reform.Based on above research, we draw some conclusions: â‘ the impetus of financial services convergence not only from the micro financial institution's competition, but also is the country's strategy to make domestic financial institution more competitive.â‘¡financialservices convergence is a double-sword, it can improve the eflficiency of financial service operation, but it also add the cost of supervision. So it is the financial supervisory efficiency determined the performance of financial services convergence.d)There is no best supervisory model in the world. Each country's supervisory model is influenced by its economic developing level, the character of its financial industry, the independence of the regulator etc.. ?Taiwan's move to the financial services convergence is accerlated by the pressure from the international competitiveness and the low performance of the Island's financial institutions. Under those situations, Taiwan definituded and swift to the direction of financial services convergence, issued the Financial Holding Company Act and reformed the supervisory mechanism, and then made a smoothly transition. But from recent research, there is no strong evidence that it improve the financial institutions' performance, one of the reasons may be the problem of supervision.China Mainland should use those experiences for reference and face the trend in the formation of financial conglomerates positively. Supervisory measures should be taken to regulate the existing convergent financial services operation. Financial Holding Company Act should be enacted in right time and the appropriate supervisory model should be choose to adapt the trend of financial services convergence.