Study In Taiwan Financial Holding Company Regulatory System

As an innovative form of universal operation, the Financial Holding Company(FHC) has its own advantages. However, its special risks, which derived from thecomplex organization and capital structure of the FHC, make the supervision of theFHC especially important. In the four years of implementation of Taiwan FinancialHolding Company Law, there are more than 14 Financial Holding Companiesestablished through application, resulting in more fierce competition in the financialfield. In order to regulate the market competition and make the supervision moreeffective, the Taiwan supervision institution changed into the universal supervisionfrom the segregate supervision. Meanwhile, the supervision institution made regulationsfor the special risks produced by the FHC. This thesis attempts to introduce thesupervision system and supervision regulations of FHC in Taiwan as well as analyzethem. Then by referring the experience and the market results of Taiwan FHCsupervision, the author tries to give some advices to build future FHC regulations andsupervision system in China.There are four chapters in this thesis: in the chapter 1, the author introduces theconcepts of the FHC and some basic theories related to the FHC, including thecomparison of the concepts, the operational advantages of FHC and its special risks.Chapter 2 explores the financial liberalization and the growth of the FHC to giveexplanation to the background in which the FHC came into being and the developmentof it. Besides, chapter 2 explains that how Taiwan gets lessons from the U.S.A andJapan in the FHC field, and the process of Taiwan's FHC. In the chapter 3, according tothe analysis of the FHC supervision system, which including both the review of theFHC modern supervision systems in the U.S.A and Japan and their affection on theTaiwan's FHC and the examination Taiwan's supervision effects of the FHC, the authorgives a point that in the light of the innovative form-FHC, the supervision systemshould be reformed. Chapter 4 is concerned about the special risks of the FHC, such asthe duplicate calculation of capital, the risk transmission, the interests conflict and so on.Chapter 4 also reviews the merits and drawbacks of the supervision regulations inTaiwan as well as their effects by giving the case in Taiwan financial market.Nowadays, although there is no laws or regulations about the FHC inimplementation in the mainland of China, there are four types of FHC, which are notsupervised by any of the three traditional segregate supervision institutions. In particular,after China entered the WTO in November of 2001, the agreement of giving foreigncapital the gradual access into China financial market, which, combined with the rapidgrowth of china economy, push the development of universal operation. Therefore, thesupervision of finance becomes extremely important. The author hopes that this thesiswill offer some references for the unborn FHC laws and the supervision system in themainland of China, and do contributions to the communication between the mainlandand Taiwan region.