The Research On Securities Corporation's Unhealthy Assets

Many of China's securities corporations are troubled by the unhealthy assets. The unhealthy assets of securities corporations are different from those of commercial banks which is represented not either by creditor's rights or by indebtedness. The unhealthy assets of securities corporations are the vaporized assets, the real values of which are lower than its original values.The unhealthy assets of securities corporations are produced in its developing history. They can be classified into three categories. The first is securities investment, including peculation investment of clients' caution money and trusteeship securities. This is the most important bad assets of the current securities companies. The second is rights and interests including bad property rights caused by investments of main business and creditor's rights caused by loan providing. The third is debt, including potential asset loss caused by sponsion and lawsuit.From the theoretical view, there are several reasons for the unhealthy assets. There are some shortcomings of the corporation governance structure, e.g. lacking of the final principals, the near-sighted behavior of agents, Lacking of risk management of investment, finance, and investment bank, the soft constraint of internal and out institutions, the fundamental institutional structure of capital market.Securities Corporation's assets has caused great danger to the whole capital market. The function of agency is lost because of the unhealthy assets, and it will cause systematic financial risk. It is also the barrier of capital market reform.As to the governance principle, the paper prefer to the market solution guided by the authorities. Concretely speaking, the market agents absorb the unhealthy assets guided by the authorities by assets layout, debt recombination and corporation annex, etc. this method can avoid the systematic risk and moral hazard. As to the incremental assets, the unhealthy assets can be avoided by normalization of securities business rang, business operation scheme, especially the hard institutional constraint..