The China's Mode Choice Of The Financial Holding Company

The financial holding company is a kind of centralized financial organization under which the parent company holds the shares of two or more financial institutions, each son company pursuing its individual business within the separate system.In view of the theory and practice of the international financial holding company, it has the potential advantage of economics of scale and scope which facilitate the financial innovation across the different business lines. Based on empirical studies and the experience of separate system in the past two decades, it is rather proper to introduce the financial holding company to China .The operation of domestic financial institutions has transformed in terms of the cooperation and joint across different business lines due to the survival pressure not only coming from the separate system but also from China's entry into WTO ,which will render them at a disadvantage to compete with foreign counterparts.The paper analyses the relative studies and theory of financial holding company from the macroeconomic and microeconomic perspective. This paper also surveys the institutional evolution and experience of the financial holding company in USA, Japan and German and divides them into three types. It analyses the embryo shape of the financial holding company that exist in China now.Then from the perspective of financial institutional innovation, based on the prediction of mode innovation Chapter 5 analyses China's mode choice of the financial holding company, the paper suggests in the present stage the industrial holding financial company is not fit for developing considering the potential risk-taking factors. While the pure holding company are the ideal choice. In line with the Chinese financial reform the there are 3 steps in the process of constructing the financial holding company.At last the paper discusses the surrounding issue of the financial holding company. Accordingly this paper puts forward some suggestions on the key surrounding issues relating the operation of the financial holding company in China.