Financial system reform in Taiwan

Abstract

To promote the competitiveness of Taiwan's financial institutions, and to build Taiwan as a regional financial service center, the government has initiated the second financial reform. In this paper, some suggestions on the second financial reform have been made. First, the improvement of current financial supervisory commission is required to perform. Second, the moral hazard index of banks after M&As should be regulated. Third, bank mergers that may result in the sharp increase of the market power should be rejected to sustain fair business competition. Fourth, the restrictions on financial institutions and the ban on Taiwanese banks operating in Mainland China should be lifted. And last, at least a state-owned bank should be left alone for policy concerns.