Loan Risk Management Of Colleges And Universities

In recent years, the continuous enrollment expansion has led to the rapid expansion of schools and the sharp increase of inputs. There has arisen an obvious contradiction between the deficiency of educational appropriations and the great demand of capital resulted from the development of colleges and universities. In order to alleviate this contradiction, colleges and universities start to get loans from banks to an increasingly significant extent. It has become a common phenomenon to run colleges and universities with debts. But when schools utilize the loaned capital from banks, they are required to pay off both the principal itself and the interest. Therefore, it's of great necessity for colleges and universities to make an assessment of the capability of making profits and debt paying capability. And as for the amount of the loan, colleges and universities have to consider not only the necessity of school construction and development, but also the school financial bearing capability. The in-time and moderate contracting of loans helps resolve the bottleneck of capital utilized for the development of colleges and universities, providing financial support for their further development and even producing good effects. Raising capital by loan changes the capital structure of colleges and universities and thus may result in the risk that because of heavy debt burden, the normal financial paying capability will be affected and can't pay off on schedule the due principal and interest. Contracting too large an amount of debts will affect the future expenditure in teaching and scientific research, sustaining expenditure, as well as the normal development or even the sustainable development of colleges and universities. The National Auditing Deputy revealed the existing problems in colleges and universities that at present some colleges and universities, by contracting large amounts of loan, are undertaking infrastructure construction considerably, which leads to extremely heavy debt burden. In the meanwhile, there also exist many problems in the loan management in colleges and universities. Therefore, it has become an urgency for colleges and universities to strengthen risk awareness, prevent the risk in raising capital by loan, establish effective financial monitoring index and prevent college and university loan risk. What's more, from the perspective of macro- policy direction and credit appraisal system of financial institutions, our nation should take necessary measures to prevent college and university loan risk.After theoretically analyzing college and university loan risk, this article intends to explore systematically its present situation and the existing problems, and then makes analysis and reflection by taking as a case the present situation of college and university loan in Chongqing City. Finally in light of the existing problems in college and university loan, it illustrates how the external and internal facets of colleges and universities take prevention of loan risk, and puts forth detailed measures about the basic principles of college and university loan.The viewpoints put forth by the author are as follows: Firstly, the article puts forth the basic ideas about management of college and university loan risk in China according to the basic theory and practice in management of enterprise loan risk as well as the concrete conditions of colleges and universities. Secondly, it makes quantized analysis, in theory and by case study, of the loan paying capability of our colleges and universities.