Asymmetric Information And Added Non-Performing Assets Of State-Owned Commercial Banks

The enormous non-performing assets have obstructed the reform of the state-owned commercial banks. Reducing the non-performing assets ratio as quickly as possible has become the key issue of the state-owned commercial banks reform. We should accelerate the disposition of the non-performing assets stock in order to reduce the non-performing assets . But what is more important is that we should control the added non-performing assets . As long as we can control the source of the added non-performing assets , we can really reduce the non-performing assets . In that case , how to control the added credit funds quality of the state-owned commercial banks , prevent the added non-performing assets is the issue to be solved urgently.A lot of studies indicate that the non-performing assets of the state-owned commercial banks are generated in a given macro economic structure and institution. However, macro factors can be effective by means of the micro bodies behaviors. Therefore, this test will analyze the activities of the state-owned commercial banks and the credit companies.We use the analysis means of the game theory which is based on the principles of the information economy. We begin with the circulation of the credit funds flow and analyze the banks and companies' behaviors in the link of the credit funds flow. At the same time, the analysis of the current punitive policy of the precaution of the non-performing assets discloses the direct reason of state-owned credit funds risk. The reason is the inverted option and moral hazard which is resulted formasymmetric information among the different grades of the bank and between the bank and the companies. The moral hazard is generated by China' economic system and related institution.The final conclusion is that in order to prevent the added non-performing assets of the state-owned commercial banks essentially we should mainly create the institution which can remove the asymmetric information ,and make the economic information display which is related to the debit and credit activities. With the encouragement and restraint of the related system and market mechanism ,we should optimize the micro bodies 'behaviors in the credit market and conquer the inverted option and moral hazard. Thus we can really achieve the target that we should improve the state-owned commercial banks' credit funds quality, prevent the added non-performing and improve the operational efficiency.