Discussion Of Macro-Circumstances And Approaches For Nonperforming Loan Disposition Between China And Foreign Countries

Commercial bank plays a key role in financial system especially in China. China's financial systems are dominated by big commercial banks, and these banks account for 90% of total loan for enterprises financing. The main problem threatening commercial bank is serious nonperforming loan problem. In 1999, 1,400 billions of NPL was peeled off from the big four state-owned commercial banks, but after 4 years, another 2,000 billions of NPL emerged in the balance sheet of the big four banks. Now the NPL problem becomes the main obstacle for China's financial system and macro-economy. Under this circumstance, how to dispose NPL quickly and efficiently becomes to the key issue for reforming the financial system.Compared with the United States, this paper analyzes the NPL's disposition of China and America in macro-circumstance and micro-circumstance view. In macro-circumstance view, this paper focus on the political and economic reason (including Japan), legal system and legal circumstance, credit culture, capital market and financial institutes. In micro-circumstance, this paper analyzes the disposition methods of China and U.S. The disposition methods in China are composed of: the disposition at the beginning of AMC, bulk sale, joint venture and NPL securitization. In U.S., the main approach is Auctions and Sealed Bids,asset management and disposition contracts,Equity Partnership Program and securitization. This paper also describes briefly the reason and disposition of NPL in Southeast and East Asian countries, and introduces the inducement and disposition of NPL in Korea and Thailand. Southeast and East Asian countries are belongs to developing counties, and their experience, disposition and problem encountered would be a good use for reference to us.Based on above-mentioned analysis, this paper put forward some principles that we should keep to in the course of NPL's disposition.