Legal Regulation On Information Disclosure Of Off-Balance Sheet Activities In Chinese Commercial Banks

AS the competition between banks becomes more and more intensive and Basle Committee requires more and more in bank supervision, commercial bank benefit gradually less from traditional deposit-loan business. Meanwhile, off-balance sheet activities (OBS) step onto the way of fast development. Since OBS cannot be traced in balance sheet, cost less, operate freely and assume less risk, it is widely developed by large number of commercial banks. OBS of Chinese commercial banks developed late, which causes to its singularity. By now, the majority of OBS in Chinese banks are financial service business such as settlement. As for derivative business, it is usually used for value guarantee. Now we China has enter in WTO, Chinese banks will face more challenges from foreign banks, especially in the field of OBS. It is sure that Chinese commercial banks will have to develop OBS hard in both scale and variety.The risk in OBS is less than that of balance sheet activities, but it doesn't amount to none risk. In contrast, there also exists risk in OBS just as traditional business. Further more, the risk in OBS is latent and uncertain, which make it hard in supervision. As soon as its risk comes into being, it will spread in a short time, there would be a bankrupt or even financial crisis. Therefore, it is necessary to enhance the supervision over OBS, which is in accord with the requirement of Basle Committee on Banking Supervision. New Basle Accord points out that Market Restriction is one of the three pillars in bank supervision. Only by all-round information disclosure, can Market Restriction act efficiently. It can be conclude that in order to supervise the risk in OBS, the information disclosure system of OBS must be improved first.The information disclosure system of OBS, as a part of information disclosure system of commercial bank, is in the scope of financial supervision. Since Interim Procedure of Commercial Bank's Information Disclosure came into effect, the information disclosure system of commercial bank has been established in China. Whereas, Chinese Bank Supervision Committee underestimates the risk of OBS, as a result, there is no specific regulation about OBS. Actually, the risk of OBS is some kind of latent risk, it would turn into real risk under some circumstance, especially in business of derivative tools, acceptance of commitment and issuance of guarantee. Once latent risk comes true, debtor would increase in balance sheet, the bank would suffered crisis. Therefore, to enhance the information disclosure of OBS is essential and necessary; we China should establish the system of information disclosure of OBS.This thesis consists of four chapters.In Chapter 1, the author makes a brief introduction of this system. Firstly, the concept of OBS is introduced. The analysis about OBS'classification and characteristic is an innovation, which is a premise of the following discussion about necessity. Secondly, there is an investigation about OBS'information disclosure in China in the aspect of legislation and practice.Chapter 2 is the most important part of this article. Based on some financial knowledge, the author makes a theoretical research about this legal system. The concept of latent risk is mentioned. The author describes the process of how the latent risk comes into real risk and further influences the profit-loss sheet. Than, a conclusion is made that we should focus on three kinds of OBS: derivative tools, acceptance of commitment and issuance of guarantees. Besides, the author discusses the value direction and economic foundation of this system and also the protection it provides to bank, finance system and some interest communities.In Chapter 3, there is introduction about Basle Committee's provisions and foreign countries'advanced experience such as America. We can learn something useful from them.In Chapter 4, the author makes research about how to improve China's system of OBS information disclosure. Firstly, the reason why this system in our country falls behind is discussed. Secondly, the author tries to find out a way to improve our country's system by legislation, procedural regulation and practical guide.In this thesis, the method of comparison, induction and deduction are used. The author compares this legal system of foreign countries with each other, than induce their experience, at last deduce the way to improve our country's system of information disclosure in OBS.