Property Rights Of State-owned Commercial Banks' Bad Assets

During the years 1997-1998, a financial crisis broke out through Korea, Japan and some Southeast Asian countries. And one of main causes is the large number of bad assets in the banking industry. While the countries involved are trying to cure their pain and recover from the depression brought by the financial storm, Chinese banks are now facing the same problem- plenty of bad assets badly affect the operation. Chinese banking senior officers and the economists have concerned the situation for years. And searching a strategy to solve the problem is one of the most important tasks on the desk..The theoretical & practical significance of the theme This article tried to analyze the cause formation of the bad assets of the Chinese state-owned commercial banks (SOCB) from the point of view of property right, and introduce the theory of property right into the field of banking industry. The author hopes to provide some advisory ideas with her finding for the research of the bad assets, especially for the reform of SOCB and the solution ofbad assets for the time being.I .The object and the base of researchThe object of this article is SOCB, and the research is based on the loanassets of SOCB.II. The main pointsDifferent from others, the author tries to analyze the bad assets from another point of view - the property right. She points out the occurrence of the bad assets due to the ill property right relationship between the government and SOCB. SOCB, at present, acts as some government organizations rather than real commercial banks. It is a fact that SOCB sometimes operates under the regional government's intervention according to the ownership linking to the managership. On the other hand SOCB does not found legal corporate-governance system. Main points:A. The formation of the bad assets is related to the technology, the property r ight system and the market. In China, the property right system is the main reason.B. We should analyze them from the interior and exterior relations of the bank property right.C. Chinese state-owned bank system highly depends on the political and economic system.D. The reform of SOCB lags behind the development of the economy, and it cannot keep up with the financial opening, globalization and liberalization.E. The entry to WTO forces SOCB to put the property right reform on their desks, and the system evolution of SOCB will rely on the co-operation of government, enterprises and themselves.F. Two choices for the system creation of SOCBG. The objects of system creation of SOCBH. For avoiding economic fluctuation, the reform of SOCB should be done cautiously. Also the solution of bad assets needs careful arrangement and the close co-operation of government, enterprises and SOCB themselves.DI.The content and structure of the article:Charter One: the bad assets of the commercial bankAs its reverse, the bad assets are closely related to the loan assets. It doesn'tonly impact on every bank involved but also the economy of whole country. Charter Two: the bad assets and the property rightThe Marxism on the property right and western modern theory of property right will be briefly introduced in Charter Two.Charter Three: the systematic cause of SOCB bad loan assetsPractical examples are given to testify that the bad assets result from the interior relations such as corporate governance and exterior relation after the character of property right of SOCB described.Charter Four: A solution -the system creation of property rightHaving reviewed the evolution of property right of foreign state-owned commercial banks, the article states that the key to solve the problem of property right is the foundation of modern corporation system. However SOCB should take step-by-step strategy to finish their reform. They need to transit to state-hold bank corporation from state-solely-owned corporation, then transit to shareholding corporation.Charter Five: the conversion of the bad assetsAccording to the experience o...