Effect Analysis Of Bad Debts On Stability Of Bank

From 1929 to 1933, with the economic crisis in the world,a international bank crisis took place, so many banks were closed that the economy was affected seriously, which never happened before.After the World War Two, the bank industry underwent a relative stable development by establishing Bretton Woods System.But from 1970', bank system was so instable that more and more bank crisis happened.As Gerard Caprio,Jr. etal. Pointed out that in the past fifteen years,there was common characteristics in the international systematic bank crisis which was never seen in the financial history.It is so that not only financial crisis secretly(the presence is that the net asset value is negative),but the presence of bank systems suffering impact of banks-run publicly(national currencyusually can't escape) .Almost every country underwent bank crisis like this or so,from the richest countries such as Japan,America to the poorest district of south in Sahara,from Asian countries which economy developed the most quickly to new transition economic countries.That the proportion of bad debts is over high is a important factor in many reasons that leads to bank crisis.The problem of bad debts in Chinese bank have got extensive attention domestic and international,because it involes the safety of financial system,that will affect the stability of economy and politics if this problem can't be properly resolved.The research is to take bad debts of bank into the instable frame of bank, analyze the influence mechanism of bad debts on bank stability, provide the theory for establishing macroscopic stable mechanism.In this paper,taking disposition of bad debts in Japanese banks as example,the effect of bad debts on stability of bank and finance is analyzed. Owing to this research has important theories and realistic meanings for keeping bank stability in dealing with bad debts and financial reform of state-owned commercial bank, problems as follows are discussed: 1.theory frame on bank stability;2.analysis about affecting mechanism of bad debts on bank stability;3.the present condition and reasons of bad debts in Japanese banks;4.the disposition of bad debts in Japanese banks and the meanings to the state-owned commercial banks in our country.To study the influence of bad debts on bank stability,there are a lot of models and variable, we must use scientific method since the theory route mustbe clarity and the example is analyzed from certain angel,so,based on the theory of bank instability ,criterion analysis and example analysis, quantitive analysis and qualitative analysis are put together to study systematic affecting mechanisms of bad debts on bank instability.