Financial Conglomerates in China

Abstract

Along with the gospel of globalization that transforms the world financial markets by desegmentation, marketisation and transnationalisation, an age of financial giants is forthcoming in most of the economies around the globe, either emerging or mature. The emergence of financial conglomerates in different countries can be interpreted by the similar considerations. However, similar reasons do not necessarily lead to the similar appearance of financial conglomerates. The structures of financial conglomerates and the corresponding regulatory organizations differ from country to country and even from one conglomerate to another.

In line with its economic framework and developmental stage, China also has its own characteristic financial conglomerates, although they are now at their initiative step and the number is quite small comparing to the huge size of financial market. Ironically, according to the institutionally specialized financial legislations, these conglomerates are rather ropedancers performing on the verge of "legitimate cliff" or even between the gap of lawful and unlawful, since banks, securities firms and insurance companies are separately capitalized and strictly confined to respective sectors.

Lack of specific regulation on financial conglomerates in China does not testify the legislative vacuum in this respect, since all financial conglomerates are comprised of individual enterprises belonging to different financial sectors. However, relevant amendments of financial legislations and appropriate adjustments in regulatory infrastructure seem necessary and inevitable. This article attempts to explore the proper measures and tactics concerning financial conglomerates that may be undertaken by Chinese regulators and supervisors on the basis of present presence of financial conglomerates, current legislative structures and instructive international experiences.

Keywords: financial conglomerate, banks, securities firms, insurance companies

JEL Classification: G2