An Empirical Study On Performance Of The Listed Commercial Banks Owned By Taiwan Financial Holding Company

In order to follow the trend of international financial mixed operation system and solve the problem of cutthroat competition caused by large numbers of banks and business homogeneity in the banking industry in Taiwan,the Government of Taiwan implemented financial reforms in 2001,including establishing financial holding company which can compete with the large international banks.Up to 2014,there are totally 16 financial holding companies set up in Taiwan,most of which are composed of commercial banks.In this paper,we mainly research on the operating performance of listed commercial banks of financial holding company in TaiwanBased on the research on the background and reviews of the literature,we construct the analytical framework of the theory,including the reform of the financial system of Taiwan,the establishment and development of financial holding company and the listed commercial bank of financial holding company in Taiwan,the theory of financial repression and financial deepening theory.Upon the above discussion we can understand the overall financial environment in Taiwan.Then we use the financial indicators of ten listed commercial bank of financial holding company to research from 2007 to 2013,constructing comprehensive variables and solving dependence problem between variables through the descriptive statistics and principal components analysis.Then we choose the right panel data through diversified tests and construct reasonable regression equation to explore the relationship between banking profit and profitability indicators and then discover the reason that affects banking operating performance.The paper expresses the positive correlation between bank's prior profitability and current performance of Taiwan banking industry,which means the higher profitability of banks,the more valuation and performance it earns.So the banks can improve its profitability to increase performance.Secondly,there exists the positive correlation between bank's prior capital adequacy and current performance of Taiwan banking industry.The higher capital adequacy of banks,the better valuation and performance it earns.So the banks can improve capital adequacy to increase performance.There also exists the negative correlation between bank's prior growth and current performance of Taiwan banking industry.The higher growth of banking,the worse valuation and performance it earns.Finally,based on the empirical research,this paper put forward relevant policy recommendations about banks of Taiwan,including appropriate merger and acquisitions,optimizing financial laws and supervision,combining tradition banking business and the internet,self-image of banks,improving the operating efficiency,establishing and implementing risk control mechanism,and improving its completeness.According to the experience of the financial system of Taiwan,this paper put forward relevant policy recommendations about banks of Taiwan,including developing multi-level model of mixed management,culturing diversity talent,reinforcing financial laws and supervision,and promoting international communication and cooperation.We hope to provide a reference for future cross-strait financial development.