Incentive And Restraint Mechanism Study Of Financial Asset Management Corporation Based On Precautions Against Moral-Hazard

Chinese government set up AMC (Assets Management Company) to settle the Non-performing assets by the end of last century. It's no doubt that AMC have made great progress in Non-performing assets settlement in the last 7 years. But the effects of AMC were seriously weakened by the deficiency of regulation and the mechanism of inner control and supervision. It is human's nature to pursue self-interest in marketing economy and take advantage of the insufficiency of regulation and supervision. So the primary of AMC is closely related to the Non-performing Assets settlement mechanism which can not balance all Groups interests.Non-performing assets centralized handling model is a typical Principal Agent problem. The purpose of this thesis is to analyze moral hazard issues of AMC by game theory and Principal Agent. The thesis provides a point of view on how to build effective mechanisms of incentive, inner control, information disclosure and supervision for the development of AMC by the ethics approach. AMC of China changes its role from a temporary organization for crisis management to a permanent financial service provider. It is essential for an AMC long term strategy to analyze the moral hazard issue of AMC and how to avoid effective mechanism of moral hazard by Economy theory model. And the effective solution for AMC moral hazard issue may benefit the development of entire financial industry as well.It is the new approach of this thesis to analyze the moral hazard issues and the management mechanism of AMC by game theory. The approach emphasizes the following elements:â‘ The result which put the Agent (AMC) moral hazard action variable in the traditional Principal Agent model and educing the sharing coefficient is bigger than that which not put in the variable. Principal Agent model which put in time variable and setting up long-term incentive mechanism model of AMC. To increase sharing proportion of AMC on non-performing assets handling income is one way to against moral hazard. The right of pledge is used into the incentive contract model under the long-term incentive mechanism. The result show AMC should build long-term incentive mechanism from point view of long-term angle to get over its short-term action.The possibility of moral hazard problem is lower when AMC having pledge of assets. The thesis designs the incentive contract which postponed the payment of the part of incentive income after moral hazard observation.â‘¡To understand inner control by instinct and experience is expressed by Game analysis. To find out the measurement of inner control related game effect through setting up converge game model. Inner control should strengthen position restrainer, department distributing of key procedure and authorization management, risk evaluation.â‘¢The thesis build supervisor by incentive mechanism of AMC fixed revenue and supervisor by sharing incentive mechanism. The thesis put forward policy advice is that to build information disclosure supervisor model between the government and AMC and to set up information disclosure constraint of non-performing assets handling. AMC is easily been caused moral hazard action and short-term management problem because of 10-year existing position and been brought supervisor problem. The thesis is still discusses the future development of AMC. The future reform and development of AMC adopted which transfer to commercial financial service company.The future of AMC is to become an almighty financial service company with main function of assets handling and for rising economic revenue and mixed financial business. The thesis discusses the way that AMC to become a holding company of mixed financial business. It is good to AMC against moral hazard.In the end the thesis summarizes the research. And put forward some shortcoming of research and future research direction.