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The Concentration Of The Risks Of Banking Credit In Real Estate

Posted on:2005-02-18Degree:MasterType:Thesis
Country:ChinaCandidate:X R WeiFull Text:PDF
GTID:2156360152965942Subject:Business Administration
Abstract/Summary:PDF Full Text Request
Investments in China have increased rapidly since 2002. There came another peak in 2003 since 1990s. According to statistics, fixed asset investments of the units of all kinds of ownership reached 1507.3 billion yuan from January to June in 2003. It has increased by 32.8 percent than that in 2002. If we take prices into consideration, the increase range is higher than that in 1993 and 1994, when it was the investment rush period.When fixed asset investments were increasing rapidly, among them the investment of real estate is quite different: from 1993 to 2003, the investment of real estate increased by 4.2 times, rising from 193.75 billion yuan to 1010.61 billion. It increased by 17.96 percent per year. Between January and September in 2003, it increased by 34 percent, that is, 381.76 billion.At the same time, the loans which banks put into the real estate were increasing too. Generally speaking, the funds include the development loans which are used by the real estate enterprises and the installment loans which are used to purchase the houses by individuals. The development loans face the links in the production chain while the installment loans face the selling chain. With the help of macro-economic policy and a series of policies by central bank, commercial banks increased the loans in production and selling fields of real estate. The remaining sum of loans in real estate rose from 310.6 billion in 1998 to 2132.7 billion in 2003. The loans in real estate increased 426.4 billion in the first three quarters of 2003. ( 135 billion was used as the development loans.) According to the increasing volume ?381.7 billion, the development loans of the commercial banks made up 35.37 percent of the total loans in real estate. If we take the installment loans into consideration, the loans in real estate played a dominant role in the process of real estate production and management. It is very rare that the business of credit can develop so rapidly in such a short time in the history.However, when investments and loans in real estate were developing rapidlyhand in hand, the risk of investment in real estate has turned into the risk of bank credit because the social credit system in China is imperfect and because the anti-risk system of the state-own banks is so weak. In the essay, I analyse detailedly the risk of giving credit which are caused by the imperfections of managing the business of credit in real estate and the process during which the real estate enterprises reinvest by defrauding the installment loans. I point out banks are facing enormous risks because of the rapid development of real estate, adding that there are some solutions of solving the banking risks effectively.
Keywords/Search Tags:Real estate, Investment rush, Bank loan, Risk controlling
PDF Full Text Request
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