Precautions And Solutions To Risk Of Our State-owned Commercial Banks--A Study On The Causes And Solutions To The Problem Assets

During the deepening of our economic reform, financial sector is playing a more and more important role in our economy. With the outbreak of international financial crisis, the risk problem of our state-owned commercial banks, ranked the most important parts in our banking, begins to attract people attention. Among the various risk factors, credit risk has become the most potentially serious one which may result in financial risk.Due to the government, the enterprises and the banks, great quantity of problem assets have piled up in our state-owned commercial banks, which are playing key roles in our financial sector, and their problem assets ratio far surmount the international to-be-guarded level, which may have ruinous impact on the banks?operation. If the problem can be tackled properly, the liquidity of the banking capital will be handicapped, which may lead to bank risks.The paper analyzes the causes of banks?problem assets from various perspectives. First, based on the portfolio theory and the analysis on the deposit-andloan of banks, the paper draws the conclusion that the banks?operation itself may cause problem assets. Second, analysis on the demand-supply between banks and enterprises leads to the summing-up that market situation can also impact the accumulation of problem assets. Finally, focusing on the particular characteristics of problem assets of our state-owned commercial banks, the paper studies the issue with the institutional economics view.After summarizing the approaches adopted and the experiences achieved while different kinds of countries deal with their own problem assets, the paper studies the methods discussed theoretically and the measures taken practically to deal with the problem, and points out that all of them are subject to limitation.Based on the study above, the paper brings forward an alternative to the practically adopted approach which involves transforming the creditor right into stock of an enterprise, now being carried out by Asset Management Corporation. The key of the alternative is that an agent----management consulting---- is introduced into the management of enterprises, which is quite experienced in and capable of operating enterprises. By such means, the situation of the enterprise will be improved and the profit increased, which help the banks to reclaim the capital they provided the enterprises as loan which later became problem assets.