Supervision Of The Financial Holding Company

On April 6^th, 1998, Citibank and Traveler group merged which made Gramm-Leach-Bililey Act passed by the Senate of USA. This symbolized that the global financial industry entered a new time of integrated operation again. Actually, integrated operation takes two forms: universal bank and financial holding company. The financial holding company has many advantages. According to the Chinese financial system, financial holding company is a practical way to integrated operation .But financial holding company brings some new problems, such as intra-group transactions, conflict of interests, double or multiple financial leverage, lack of transparency and conflict of interests. In particular, there is no explicit law and efficient supervision for financial holding company in China. Delong crisis exposed these problems. Therefore, we must study how to supervise and regulate financial holding company.This paper consists of four chapters. Chapter 1 summarizes the supervision and regulation of financial holding company. First the concept of financial holding company is established, while financial conglomerate and universal bank are compared with financial holding company. In the consequence, the paper reviewed the theories of financial supervision.Chapter 2 outlines international practice for the supervision and regulation of financial holding company. First, Supervision of Financial Conglomerates was reviewed in order to introduce common principles. Secondly, we build up international frame for supervision of financial holding company. In this frame, we first compared two models of regulation and concluded that these models depend. Then, we discussed some aspects of the supervision and regulation, such as capital adequacy, intra group transactions, and risk concentration.Chapter 3 gave some advice for supervision and regulation of...