Financial Risks In Corporate Asset Securitization And Their Assessment

Abstract:Asset Securitization formed in 1970s in the 20th century and enjoyed decades of tremendous development. Although it has been introduced to china in early 1990's, it only began its rapid growth after State Council initiated a policy to support its development in 2004, and also after China Securities Regulatory Commission and China Insurance Regulatory Commission published papers to facilitate its development.When introduced as one effective and fine-structured financial instrument for capital raising for enterprises, it can bring a lot of benefits, such as increasing asset liquidity, diversifying and mitigating risks, and saving costs in. There have been heated research in such securitization and many scholars, professors and security company researchers have been involved in it. However, risk assessment and control have been an important aspect which has been neglected in the usually over positive atmosphere. Moreover, the rarely seen risk researches in this respect are seldom focused on the financial segment and the corporate itself as a Securities issuer. This thesis endeavors to fill in the empty space and conduct in this regard its researches as follows.Firstly, it summarized the basic theories behind Asset Securitization, and introduced, in a systematic way, the concepts, characteristics, as well as principles involved, laying a foundation for further discussion. Secondly, it studied the reality and problems of securitization, from both theoretical perspective and practical view, which enriches its research.After that, securitization, as one way of funding, has been compared with other ways. Further comparisons went to financial risks involved and other types of financial risk, and the characteristics of Corporate Asset Securitization also focused. All of these help to recognize and assess those financial risks, and accordingly, lay a ground for variable and benchmark selection in risk assessment.Moreover, it has given a lot of weight to the introduction of methodologies of different types of risk assessment and their indicative variables. In summary, indicators have been chosen from systematic risks, traditional financial risk, as well as the derivative financial risks, and the weakness of traditional indicator system has been corrected to some degree. Finally, it combined both quantitative and qualitative researches and assessed the effectiveness of the indictor system itselfIn the end of this thesis, constructive proposals have been raised for better management of financial risks in asset securitization, in the hope to enhance its positive side.