Performance Of Financial Holding Company

In the trend of financial mixed operation, the flattop-like financial holding groups have beenmaturing in developed countries and regions, and become a focus in the financial upheaval in2007. This organization management pattern adapt to the current financial development in ourcountry. In theory, we regard it as an ideal choice for our financial institutions such as banksbefore we formally entered the mixed operation. Although China has not yet enacted laws toregulate the financial holding company, they have appeared in our financial industry in variousforms. Through the establishment of financial holding group, some commercial banks cooperatewidely with each other in the securities, funds, trusts and insurance business. There are growingcalls to develop financial holding company. However, at present, the theoretical research aboutour financial holding company is still lagging behind. Especially in the current financialenvironment in our country, whether the business performance of financial holding company issuperior than that of non-holding specialized financial institutions in the actual performance, stillneed some empirical support.This paper expounded the basic theory of financial holding company and introduced theconcept and the type. Then we adopt economics theory to analyze the business performance offinancial holding companies, including economics of scale effects, economics of scope effects,synergies and risk prevention effects. Of course, improper control also can result in efficiencyloss, and encroach the financial market efficiency, consumer welfare and public interest. In thesame time, we discussed the development of financial holding company pattern in our country.Our rudiments of financial holding or quasi-financial holding companies are still in the stage ofexploration, and they are mainly formed by financial institutions holding and industry capitalinvestment.Then this article constructed the factor analysis model. We select CITIC Group, Bank ofChina Group, Everbright Group and Ping An Group, which are the representative financialholding companies, as well as ICBC, Bank of Communications, CCB, ABC and CMBC, whichare in line with financial holding definition, as a series of financial holding company samples.We select CMSB, SPDB, Industrial Bank, Hua Xia Bank and so on as the specialized Bankssamples. We organized the financial data from2010to2012including10indicators such asROA, CAR, etc. We make use of SPSS16.0for factor analysis and ranking, and observed theperformance both lengthways and athwartships. The results show that financial holdings’performance superior to non-financial holding, but not prominent; the performance of financial holdings improved for three years from2010to2012, but not obvious; financial holdings do wellin earning capacity; financial holdings have poor performance in risk control. Therefore, thispaper argues that we can’t scale expansion and financial diversification blindly. Instead of this,we’d better have a rational judgment and choice and based on situation. After that, we introduceda case about CITIC Group to analyze its performance and experience.In the last of the paper, the writer put forward some measures about financial holdings’steady development from the aspects of financial holding itself, legislation and externalregulation, such as internal controls,"firewall" system, legisative regulation, and informationdisclosure supervision, etc.