Functional Positioning And Performance Evaluation Of The Finance Companies Studied

Business groups' affiliated finance companies are a special type of financial institution. They are the products of combination of business groups' industrial and financial activities. Finance companies in China face several problems, including lags in development, simplicity in profit model and lacks of innovation capability. These are caused by two factors, one is the strict institutional constraints by regulatory authority, the other is the improper function designation by both regulatory authority and business groups. The same problem lies in the performance evaluation system. Hence to improve the function designation and evaluation system is important to the healthy development of finance companies, and are major issues discussed in this thesis and followed by a case study.Firstly, descriptions to finance companies in different countries and various classifications are introduced in detail, and the business groups' affiliated finance companies are clarified as objects to discuss in this thesis. Then finance companies' development progress and the present conditions are introduced, and characteristics of finance company industry are analyzed as limited market range, simple fund sources, strong affiliation to business groups, and supervised by both regulatory authority and business groups.Then the present situations and defects in function designation and evaluation system of finance companies in China are discussed and analyzed in both aspects of regulatory authority and business groups. With the regulatory policies, major defects are incomplete function designation, excessive emphasis on market limits, dual standards in function designation and regulatory policies, and lack of unification in policies. With the function designation by business groups, major defects are lack of distinctions about the business groups' industries and confusions between finance companies and normal enterprises in the group.Then based on the defects discussed above, suggestions about finance companies' function designation and evaluation system are provided in both supervisory and business groups' positions.In the last part of the thesis, a case study is made on China Power Finance Corporation Limited (CPFC) based on the discussions above. In the case, the specific situations of CPFC's function designation and evaluation system are discussed, and relevant suggestions for improvements are produced.