Analysis On Legal Issues For The Risk Of Our Banks' Factoring

In the early 1990s,factoring is still a fresh thing in our banks. But with the formation of global market competition, the businessman has not only stay in quality and price competition. Sales and payment terms, there are more and more attention to. Now the traditional credit settlement cannot meet the demands of the market, share gradually declines. Factoring is a new trade settlement, including finance for the supplier, maintenance of accounts relating to the receivables, collection of receivables, and protection against default in payment by debtors. Factoring plays an important role in global market. Since 1993, Bank of China joined the Factoring Chain International (FCI), factoring industry development quickly in our country. Comparing with the developed countries, such as Britain and America still have a large gap. Our country as a trading country is conductive to the development of the factoring industry. This is a good opportunity for our bank which could make it become a new profit growth point. But due to the lack of laws and regulations, our banks could meet the legal risk, operating risk and credit risk, etc. How to avoid risk and make full use of the present resources has become a realistic problem faced by our banks. Based on this, the paper focuses on the risk which banks could meet in factoring. It will discuss the legal nature of the factoring and the omissions of domestic law in the first part. The second part is discussing the core content of factoring which is the legal risk of the receivables by the method of comparison. Including the content of transfer and the effective date of transfer, etc. The third and fourth parts discuss the operational risk and credit risk by the method of empirical analysis, which in order to give some feasible suggestions.Through the analysis of four parts, can come to the conclusion that although there are some omissions and unreasonable for domestic law, the risk which our banks could meet is controlled. However the problem is still there. So at the end of the paper, will give some advices which including the construction of legal system, credit system, and the bank's internal system. In order to form a benign mechanism to guarantee the factoring industry develops fast and steady in our country.