Credit Risk Assessment Reseach On Forest Right Mortgage Loan

In order to maintain the steady and rapid development of forestry, changing the approach of forestry development becomes absolutely necessary. The decision on accelerating the development of forestry issued by CPC Central Committee and State Council in 2003,which starts the revolution in forestry rights. As a consequence, Forest Right mortgage lending emerged. Credit risk is the main factor that restrict the deepen implement of Forest Right Mortgage Loan, Assessing the credit risk in forest ownership mortgage so as to grasp a clear and accurate understanding of the Essential characteristics,formation mechanism and causes, forms this research's topic.This research topic has its very reality meaning. It provides an effective tool for banks and other financial institutions to measure the credit risk of forest right mortgage loans, and finds effective ways to avoid risks; It also helps to promote the sustainable development of Forest Right Mortgage Loan,and solve the financing constraints of forestry so as to promote the way of forestry development. This study has theoretically inspiration meaning, which enriches the study of credit risk and also fills the gaps in theory.The Analytical framework of this study directly benefits from the methods and idea of information economics led by Joseph Stiglitz expands its content based on the credit risk assessment of Forest Right Mortgage Loan from the view of forest assets risk.This chapter analyzes Forest Right Mortgage in the aspect of economic, reveals the forest assets'economic value, by the data analysis both on the macro and micro level and using security theory and options theory, thus providing theoretical basis for the rational of Forest Right Mortgage from the view of forest assets risk. This chapter uses game theory, information asymmetry theory, respectively study the contract breach performance of foresters and its formation mechanism, which provides a theoretical basis to the establishment of the Forest Right Mortgage Loan Risk Index System and assessment model. This chapter put forwards the potential factors in credit risk of mortgage loans by a lot of documentary Analysis and practical investigation in the field of banking. This chapter classifies and interprets of these potential factors From the financial ecology, forest mortgage assets security, profitability, perspective of liquidity.This article studies those factors,. Datas of 198 valid questionnaires, which is for loan officer of rural credit cooperatives, come from Nanping and Sanming City of Fujian Province, using Ordinal regression model to select from, in the aspect of the financial ecology, forest assets, security, profitability, liquidity and so on. All above, as the basis, determine the index system of comprehensive evaluation model,and establish an integrated assessment model. Then, this paper puts forward the recommendations for prevention measures of Mortgage loan Credit Risk., as well as the recommendations of prevention for forest ownership mortgage credit risk.This research comes to the following inclusions (1) The forest resources have stronger security with the Credible threats and enforceable, This provides a guarantee for the loan commitment, and plays an important role in release of credit risk.(2) guaranty is the basic assurance of the repayment of the Forest Right Mortgage Loan. The standing comes from the growth in the value of loan forestry. (3) the existence of forestry risk weaken the function of slowly-releasing mechanism。The type of default of forest right mortgage are as follows, Rational Default, Passive Default, and Deliberately Default. The analysis of the game between the foresters and banks shows that analysis shows that Foresters are strictly dependent on the assumptions of payoff function to choose whether to default or not. If default brings more profits than compliance, foresters will select the default. The incompleteness of financial ecology aggravates the information asymmetry between the foresters and banks. In addition, the lack of the compensation value will result in the rational default of the borrowers. If the forestry cannot be realized in the market normally, the foresters will default deliberately. (4) There are almost 20 factors in forest Right Mortgage Loan Credit Risk as follows,Forest fires, forest pest, climate hazards, forest Pirates of the cut, timber prices, forest management and protection costs, cutting costs, planting costs, processing costs, management methods, rotation, species management, site conditions, limits logging management system, the right to market maturity of forest and forest management policy, natural resource protection policies, the registration management system, forest, forest insurance, assessment of forest assets and so on. (5) The results of the Evaluation Index Selection showed that, from the Perspective of Forestry production, the significance factors which affects the security of forest assets are the forest fires, forest diseases, insects, rodents, and theft of forest cutting; from the Perspective of financial Ecology, the significance factors which affects the security of forest assets are the forest right registration and management system and the assessment of forest assets; the significance factors which affects the profit of forest assets are the timber price and mode of operation. The significance factors which affect the circulation of forest assets are management system of Forest logging and maturity of right trading market. (6) established an integrated assessment model ---- high-level Type double logarithmic model. The model shows that the registration of a forest management system, forest asset valuation, forest fires and illegal logging influence the Credit Risk of Forest Right Mortgage Loan significantly.