| In the late 1980's,China strides on the way of financial innovation with the deepening financial openness and liberalization. Banks are the pillars of financial industry in China as a developing country while state-owned commercial banks are the principal part of financial innovation, which depends on present conditions. Firstly, the four state-owned commercial banks monopolize the financial market and it is inevitable that our financial innovation is typified by state-owned commercial banks. Furthermore, state-owned commercial banks are confronted with various difficulties. First of all, with dominant state-owned property right and ownership's misplacement and non-transference, state-owned commercial banks are long-term protected by the government, suffering from low efficiency and serious diseconomy in scale. Thus, it can hardly for state-owned commercial banks to realize their corporate property rights and establish effective internal governance. Second, there is high bad-debt rate. By the end of 2002,the bad-debt rates of the Bank of China, the Industrial and Commercial Bank of China, the Construction Bank of China are 22.37%, 25.52%, and 15.36%. Because of its heavy burden year by year, it has not seen announced for the Agriculture Bank of China's bad-debt rate that is expectedly much higher. Third, with simple business structure, state-owned commercial banks see increasingly decline of their monopolizing position. Meanwhile, the strict separate operation mode had not reduced systematic risk, but possibly enlarging financial risks. Finally, after China's entry into the WTO in dec.ll, 2001, the state-owned commercial banks faces with more challenges. Foreign banks have competed with Chinese banks in advanced customers and talents by taking their advantages in multinational operation and innovation and relying on their financial rich goods, advanced services and scientific operating mechanism. Therefore, the first thing to understand financial innovation in China is to study the innovation of the state-owned commercial banks, which is one of the aims to write this article.On the other hand, nowadays in China, the national reform on economic and financial system is going smoothly. However, many problems are still unsolved so far, such as rigid legal regulation, light innovation consciousness of the state-owned commercial banks, few financial tools, undeveloped financial market, backward financial service and management, informal financial competition, etc. Whenconducting the state-owned commercial banks innovation with so many problems, it is apt to produce financial risks. Risk management gradually become an important part of the state-owned commercial banks' operation management because their operational risk is increasing with the change of business environment and intensified interbanking competition. In nature, banks' innovation risk is classified as extra risk instead of existing risk. Considering the fact of huge existing risk, it seems more important to evade extra risk. Therefore, it is of practical significance to study the innovation risk of the state-owned commercial banks and seek ways to evade risk.The subject of this article is innovation risk of the state-owned commercial banks, which is shortly called innovation risks of banking because the state-owned commercial banks are the main part of the national banking system. The article totally consists of four parts, the main part of which is to manage the innovation risks of banking.The first part is the cause and present conditions of banking innovation, which firstly introduces the general theory of banking innovation, especially institution reform theory that conforms to situation of our country. Then the subject of this article is emphasized as the innovation activities of the state-owned commercial banks after the opening and reform. Our banking innovation has both its especially international backgrounds and abstruse internal causes. Banking innovation quickly with the beginning of knowledge economy. The establishment... |
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