The Capital Regulation of Financial Holding Companies
Date Issued
2006
Date
2006
Author(s)
Chen, Hui-Chun
DOI
en-US
Abstract
The study focuses on the capital regulation of heterogeneous financial holding companies. First, the thesis introduces the definition and capital regulation of financial holding companies in the United States and the European Union. Financial conglomerates which provide diversified services have dominated the financial service industry in the past decades. Since each financial sector has each regulator, a question has arising that whether it is necessary to impose further capital regulation on the consolidated group level. To study the issue, the thesis introduces the international practice including the United States and the European Union. They both have very deep and complete financial markets. It is believed that their experience is valuable and inspirable to Taiwan.
Since the group’s capital adequacy is the central issue of regulation on FHCs, the thesis introduces the calculation methods of the United States, the European Union and Taiwan respectively. Because the amount of capital surplus would cause great influence on the level of group’s capital adequacy ratio, the idea of the transferability of capital surplus has to be studied carefully. The thesis suggests that Taiwan should adjust current practice in some respects that FHCs can manage their higher-cost capital more flexibly and effectively.
Finally, the thesis introduces the regulations on capital structures of FHCs in Taiwan. The study finds that there is high correlation between debt to equity ratio and double leverage ratio. It is redundant that regulator include both ratios as indicators to monitor the capital structure of FHCs. Further, different businesses has different natures, comparison between CARs from heterogeneous FHCs is distortive. The higher a FHC’s CAR doesn’t necessarily mean that it has a better capital structure or is more competitive.
Subjects
資本監理
資本適足率
金融控股公司
雙重槓桿比率
Capital regulation
Capital adequacy ratio
Heterogeneous financial holding companies
Double leverage ratio
Type
other
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