On the State-controlled Financial Institutions and Privitization Policy
Date Issued
2008
Date
2008
Author(s)
Zhou, Zhi- Rong
Abstract
A series of liberalization policies were undertaken in Taiwan since 1979. The standpoint of such polices is based on the hypothesis of the liberal theory of economics and Neoliberalism – within the system of capitalism, an individual acting for his own good tends also to promote the good of his community. Therefore, it was argued that the government should deregulate and let market determines the manufacturing and distribution. However, the government failed to act in accordance with Article 10 of The Additional Articles of the Constitution. Pursuant to the Act of Privatization of Government-Owned Enterprises, an originally state-owned financial company will be deemed to finalize the privatization process when its shareholding of the government fell under 50%. Despite the shareholding’s being less than 50%, the government still has substantial control in this kind of financial institutions. Such kind of financial institutions is the main target of our research in the thesis.he management team of the state-controlled financial institutions, the same as the other Home economicus such as the major shareholder of private financial institutions, would look for their greatest interests by using the methods provided by the relevant laws and regulations, such as proxy, voting agreement, voting trust, etc. They obtained the control of the business with apparently low price, and even manipulated the stipulation, interpretation, and execution of relevant regulations by bribery. As a result, it has caused the capital to be further centralized and eventually led to the dispute concerning the distributive justice. On the other hand, the issues related to conflicts of interest also arose, and the moral hazard of the agents is inevitable. Given the above, the poor corporate governance substantially enlarged the risk of the financial industry. When there is market failure, the government is expected to intervene. However, the government has failure from time to time, and the market cannot function normally absent a sound legal framework to regulate in this regard. The laws and regulations fail to reach its original goals to protect the property rights and maintain market order. he thesis is aimed to do a study on the background and reasons behind this phenomenon. The author tries to find out the root of the problems by studying the actual cases with respect to the merger and acquisition dealings between the state-controlled financial institutions and private financial institutions, and it is hoped that a resolution can be sought to meet our expectations toward justice and equity.ey words: deregulate, privatization, state-controlled financial institutions, substantial control, Homo economicus, dictribute justice , market failure, conflict of interests, principal-agent problem, government failure
Subjects
deregulate
privatization
state-controlled financial institutions
substantial control
Homo economicus
dictribute justice
market failure
conflict of interests
principal-agent problem
government failure
SDGs
Type
thesis
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