China Automobile Financial Risk Management

Automobile finance is a high risk, high yielding financial services item outside China. It is an accelerating agent for the development of automobile industry, and brings high profit for the automobile finance service providers. With the rapid economic growth of China, people's income and living standard are improved steadily. Automobile finance business has witnessed a fast development. While at the same time, the high risks hidden gradually come to the surface, owing to the nationwide immature credit system, unsound laws and regulations, underdeveloped banking products, lack of risk management experience, and the malignant competition between banks fighting for business, etc. All these factors combined severely hamper the further development of the automobile banking business.At present, commercial banks are the major providers of the automobile financial services of China. How to take precautions against the risks and keep them under control has become the focus of attention for the concerned banks, and a problem still to be solved before attaining any further healthy development in the automobile financial services.This paper takes China's automobile financial risk management as its subject investigated.First, the author deals with the related concepts and theories of automobile finance and automobile financial risk management, discussing and analyzing the definitions, characteristics of automobile finance and automobile financial risk, and the causes of the risks. And then analyses the status quo of automobile financial risk management in China, probing into the open questions and analyzing the causes of the status. Next, proceeds to analyze the history of automobile finance and its risk management in other countries, summarizing their experience in hope of providing reference for risk management in China. Finally, the author puts forward some clues and countermeasures for the perfection of risk management: (1) construct a scientific and rational framework for automobile financial risk management; (2)analyze how to develop a sound consumption credit environment in China and push forward the construction of a credit system. (3) put forward some practical measures which could help China's commercial banks to improve their financial risk management.