The Research On The Mechanism Of Problem Banks' Withdrawal Of China

The hugely bad assets of banks produced against the background of the economic reform in China have become noticeable to us and are threatening Chinese financial safety in such an environment that the planned economy is being transferred to the market economy. One important characteristic of our market economy is that an enterprise must assume sole responsibility for its profits or losses. It looks more and more important to establish an effective system of problem banks'withdrawal from market to deal with the risks. In this dissertation, the author tries to give out his viewpoints on how to establish Chinese system of problem banks'withdrawal from market adapting for Chinese reality on the basis of drawing lessons from those abroad.This dissertation consists of four important parts: the theoretic analysis about problem banks'occurrence and effect; the disposal of problem banks abroad; our country's actuality about problem banks'withdrawal from market and the author's viewpoints about how to establish our own mechanism of problem banks'withdrawal.In part one, the author mainly analyze the problem banks'occurrence and effect based on a great deal of literature, applying information economics & chaos theory to analyze this question. According to the information economics, information's asymmetry results in banks'instability. The"moral risk"and"converse choice"increase the bad assets of banks and the possibility of many people drawing at one time. The author also apply"chaos theory"to explain problem banks'withdrawal. The variety of banks'number is similar with biologic change. There is furious competition between banks, just like biosphere, so there must be some banks to quit from market.In part two, considering the situation's comparability, the author select Poland, Japan & America. China and Poland were both under the influence of Soviet Russia, banks were governments'apartment and tools to regulate macro-economy, so Poland tries to avoid the banks'withdrawal, which is antipathic to our country's market economy; Administrative intervention is one of the most important character of Japan's bank industry, the government plays an important role on banks, as a result, they take market's factor into account less on the mechanism of banks'withdrawal; As a developed country, America has prosperous markets and the strict legal system, which make its system of commercial banks' withdrawal standard and operated smoothly. A system is usually established and consummated against the condition. The unit banking system, which led to a number of banks established, makes it possible for many of those American problem banks to go bankrupt and the capital market is also applied for the sale of bad assets. As to China, we should be cautious to problem banks'withdrawal.In part three, from the analysis of Hainan Development Bank's withdrawal, we can see some limitations of our banks'withdrawal mechanism. The first one is the confliction between government's behavior and market's behavior; the government intervene with banks'withdrawal too much; secondly, the rule of dealing with problem is far less perfect, fair and efficiency which can not be embodied. Thirdly, we are lack of law and code about commercial banks'withdrawal from market; fourthly, we can't give numbers of depositor sufficient protection due to lack of deposit insurance.In part four, the author brings forward his viewpoint about how to establish our own problem banks'withdrawal mechanism. First, we should make more research on problem banks'reason and character, and popularize the knowledge about it. Second, consummating our law and code about problem banks'withdrawal, For example, establishing judicial interpretability of problem banks'withdrawal; constituting the ordinance of banks'bankruptcy. Third, trying to deal with problem banks well-timed. Fourth, setting up deposit insurance system.At the present time, we can set up the central deposit insurance company authorized by the State Department, all banks hand in fees compulsively according to their size, assets , status etc.In writing this dissertation, one of handicaps is data collection, there isn't enough information studying this theme. The other one is the author's viewpoint is different with the popular notion"bank is too big to fail", and there were only a few banks'withdrawal from market.This dissertation has its own characters: (1) Apply several kinds of theory analytical method to make problem clear, upon which the author draw a conclusion that problem banks should quit from market. (2) See about other countries'mechanism of dealing with problem banks, for example, Poland, Japan & America, and use their experience for reference. (3) Upon other countries experience, the author bring forward original viewpoint about how to establish our problem banks'withdrawal mechanism.