Research On Internal Capital Markets Of Financial Holding Companies

Since Dec.2006, the financial filed of the State has been formally open aboard. The multinational financial conglomerates entered the state one by one; they occupied market proportion of financial institute of our state using abundant capital, advanced technology and rich management experience, which pricked up the competition of the market and cause huge threat to financial institute of our state. How to survive and develop in the furious market competition becomes a problem which requires serious consideration for financial institute of the State. Most of the scholars consider that the financial institute of the State must do the same as the multinational financial conglomerates, collecting the resources of bank, security, insurance and all of the other kinds of financial institute in terms of information, technology, capital and human resources, implements diversification, so as to compete against the multinational financial conglomerates. Establishing financial holding companies to develop financial institute of the State has been recognized widely.After establishing financial holding companies, besides economies of scale, economies of scope and synergism, the conglomerates can share information, technology, human resources and capital among all subsidiaries, that is, among the internal subsidiaries of financial holding companies, there exist information markets, technology markets, labor markets and capital markets. Of which, the capital is key to development process of financial institute. This text studies operation mode and operation efficiency of internal capital markets of financial holding companies.Chapter 1 analyzes basic theory of internal capital markets to establish base for the latter chapters; Chapter 2 reviews literature of efficiency of internal capital markets, and analyzes the effect of external capital markets on internal capital markets; Chapter 3 discusses the characters, fund sources, and operation mode of internal capital markets of financial holding companies; Chapter 4 carries out empirical analysis on capital collocation efficiency of internal capital markets using panel data of financial holding companies of Taiwan, and finds that financial holding companies of Taiwan do have internal capital markets, but there is no evidence to demonstrate whether the internal capital markets are efficient or not; Chapter 5 concludes and points out subjects of future study.