Study Of Handling, Prevention And Financial Arrangement Of Our Country’s Problematic Banks

Problematic banks normally refers to the banks with internal operating management problem or facing serious financail crisis cause by external significant event, which would cause a run on a bank, closing-down or bankruptcy. Effect of problematic banks deterioration is financial crisis. Problematic banks cause a great economic loss to a country. As a result, theoretician and government pay close attention to dealing and prevention of problematic banks. How do problematic banks emerge? What kind of damages it creates? How to deal and prevent problematic banks effectively? Foreign and local theoreticans and government have made a great deal of study on the causes, handling policy arrangement of problematic banks.This paper focuses on problematic banks, studies the theorectical reseach and practical result of problematic banks handling, takes example of developed economic systems like Europe and the U.S. problematic banks’management theory and practise, summarizes our country’s problematic banks management and practical result, searching the cutting-point of the study, analysing problematic banks internal system theory, incorporating current economic situation and problematic banks management theory direction, dealing effectively with problematic banks, maintaining the fmanical system stability, proposing a complete three dimention safty network for establishing our country’s problematic banks managemnt and prevention, and setting banks asset dynamic loss provision accounting arrangement.This paper’s content and general structure is divided into4main parts, detailed framework structure arrangement is as follow:The first part includes chapter1and2. Chapter1is introduction. From area like study significance, background, paper introdcution, concept, analyses problematic banks research significance, consideration, study direction and study cutting-point. Pointing out the existence of’blind spot" in current study and policy arrangement of problematic banks. Therefore, new conceptual system and policy arrangement should be established:the related study of problematic banks can be divided into management and prevention. Conventional management policiy study are for those banks with problems, and preventional policy arrangements are for invisible problematic banks. Invisible banks theoretical difficulty is setting up dynamic preserved system base on inverse cycle. Chapter2summarises our country’s banks developemnt history and the exiting problem, points out our country’s invisible banks’practical situation.The second part inclueds chapter3. This chapter analyses the harmfulness and causes of problematic banks from theorectical viewpoint.. Firstly, according to external theorectial point of policy economic, analyses the harmfulness of the existence of problematic banks. And then analyses the causes of prooblematic banks and the prominent reasons of these banks from the viewpoints of agency conflict, bursting of bubble economic, financial monitoring malfuntion. The third part includes chapter4and5. Chapter4uses international examples to study problematic banks management analysis. Studing mature methods of foreign problematic banks management of remedy system, market exit system and deposit insurance system(investor protection policy). Although these countrys’system of ownership, economic development level and historical stage is different from China, through summarising the experiences and lessons of foreign conventional management method towards problematic banks, it will set a research example to our country’s problematic banks management. Chapter5studies the historical progress of our country’s banks management, analyses the result of our country’s problematic banks management. First of all, it analyses our country setting up4asset management company and handles banks’bad debts. And then analyses the experiencial result of our country’s commercial banks evolution, introducing strategic investment, and listing process. At last, it figures out the current local and foreign challenges, problem, pointing out the urgency and propose of establishing the preventions system of problematic banks management.The forth part includes chapter6and7. Chapter6studies safety network construction of preventing and manageing our country’problematic banks. Incorporating current study direction and economic situation, conclusion is drawm on the base of previous analysis:Base on micro financial structure control, middle accounting policy design and macro system monitoring, establishing3dimentional safety network system is proposed; According to our country’s banks development status, banks strategic development pace should be fasten, preventional self-strengthen system of problematic banks should be set up; The paper points out the financial arrangement deficiency in our country’s problematic banks safety network system, proposes the urgency of bank asset dynamic loss provision arrangement. Chapter7states the establishment of bank asset reduction dynamic provision model, base on absolute value theory, macro pressure testing system, setting parameter pobability distribution, process Monte-carlo case simulation, setting up dynamic loss provision model, further analyses DLPM effectiveness. As last(chapter8) conclusion is made, giving policy suggestion and prospect. The innovation of this paper is:1. It’s not rare to study problematic banks in foreign counties. However, it’s a new trial to systematically study wide on every side about problematic banks management and prevention policy arrangement.2. Conceptually, problematic banks are divided into recessive and dominant problematic banks, and problematic banks contagious harmfulness, concluding the viewpoint of bank self exit nomal recessive problem.3. Problematic banks have their own dependent path. It’s important to build self strengthening system base on this path which should not be conered at"taking-over or bankruptcy closing down"4. Problematic banks handling methods including:providing help, re-structuring and market withdrawing. A policy border issue exits in problematic banks3handling polciy arrangement, which leads the management make a dynamic handling cost and return analysis in the official process of managing the policy arrangement of problematic banks.5. Base on micro financial structure control, middle accounting policy design and macro system monitoring, proposed the establishment of3dimentional safety network system. 6. Accounting to our country’s bank development status, through fastening the banking stratigic development pace, establishing preventional problematic banks self strengthening system.7. Pointing out the financial arrangement deficiency in problematic banks safety network system, proposed a bank asset dynamic loss provision model financial arrangement base on absolute value theory, macro pressure testing system, and Monte-carlo simulation.