Conclusion

This paper describes the current status of financial regulatory structures in the PRC; Hong Kong, China; Singapore; and Taipei,China, particularly in banking supervision. It notes that financial regulatory structures in Singapore and Taipei,China have integrated financial regulatory structures, while the PRC and Hong Kong, China have traditional fragmented structures. Based on financial indicators of capital structure and operating performance in the greater PRC during the period 2003–2008, the results do not show that the banking performance under an integrated structure was better than performance under fragmented regulation.

This finding is not only consistent with evidence from the literature, it is also supported by actual experience with financial regulatory reform in the US and the EU. In June of 2009, although the Federal Reserve was given greater power to oversee large financial institutions in the US, the financial regulatory structure retained its traditional fragmented structure. The newly created National Bank Supervisor (NBS), is mainly responsible for regulating federally chartered depository institutions. The SEC is mainly responsible for overseeing securities and some derivatives. In the EU, there are two new institutions: the European Systemic Risk Council (ESRC) and European System of Financial Supervisors (ESFS), to be composed of new European Supervisory Authorities.

There is no evidence to support the claim that an integrated regulatory structure is beneficial to banking sector performance. However, the traditional financial regulatory structure is being challenged by the blurring of boundaries between banking, securities, and insurance. Meanwhile, greater financial globalization and the development of derivatives have made financial systems increasingly complicated. Greater cooperation in global financial supervision therefore needs to be pursued. Given the current situation in Asia, Asian financial supervisory cooperation could follow the Lamfalussy Process adopted by the EU.

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