The Problem Of Bank Reform Analysis

The large amount of bad assets is a serious problem that prevents our country's financial industry from moving forward smoothly. Since 1999, for improving the quality of banking sector's loans, 14000 billion Yuan bad assets have been taken from Industrial and Commercial Bank of China, Agriculture Bank of China, Bank of China and China Construction Bank to China, Huarong Asset Management Corporation, China Great Wall Asset Management Corporation, China Orient Asset Management Corporation and China Cinda Asset Management Corporation respectively. Since 1999, the People's Bank of China has claimed all commercial banks to classify"five class classification management modes"to manage loans. Four state-owned commercial banks also continuously enhance credit management and try their best to withdraw non-performing loans. They have made great progress. The total amount of bad assets and the percentage of bad loans in all loans have both dropped since 2001.But both figures are still relatively higher than western advanced country banks'figures. The existence of large amount of bad assets has many negative effects: To the banking sector, it reduces bank's profits and influences the stability of banking system. To the country, it reduces the country's fiscal revenue and may cause inflation and financial crisis. Therefore, it is an urgent problem that should be solved as soon as possible.This paper discusses the bad assets is good in non-operating condition. Not promptly brought to the normal bank interest or principal of the bank's assets is difficult to recover. This paper first describes the theory of industrial organization connotation, the theory of industrial organization is in the same industry is the rational allocation of resources among enterprises competition, especially from the point of view (that is, the market is competitive. or monopoly) to illustrate the inter-industry enterprises in the allocation of resources is reasonable. Such enterprises include: market relations between the transactions, acts, resources occupation relations and interests. In 1950s, Harvard University Prof. Mason and Bain tectonic theory in the market structure- market conduct -market performance effective analytical framework (SCP), and its basic meaning is that the market structure in the enterprise market, Enterprises operating in the market and also decided to conduct various aspects of economic performance. Then that the study of the industrial organization of banking industry, is the special theory of industrial organization in the banking industry specific applications, which refers to the relationship between the banking industry. The banking industry is the main market structure and market conduct, the relationship between the performance and study of the interrelationship between banks. Industrial organization of banking industry is to formulate policies and important theoretical basis for the supervision of banks. Through analysis of the domestic and foreign scholars and experts on banking reforms related to the research results, pointing out its shortcomings. This article viewpoint: The focus of China's banking reforms to the structure of property rights, or simply flawed market structure reform, therefore, we should choose both the ownership structure and market structure of the comprehensive reform path.The formation of the bad assets of China's banking industry there are three main reasons : First, create a single system of state-owned property rights is not clear definition of property rights, the fuzzy relationship between ownership and management, separation of powers is not completely; Second, the lack of supervision caused by inefficient banking supervision, financial institutions can not correct its weak internal controls, lending norms and regulations and other management problems, low quality of credit assets. Lack of liquidity and ability to pay increasingly serious problem and encourage the formation of the bad assets of banks. Thirdly, the structure of domestic demand imbalance caused a serious shortage of economic structural imbalances, the bank credit funds invested too simplistic. Bank credit has caused the low quality of assets. Because of the bad assets of China's four major state-owned commercial banks : the status quo of China's banking sector ranked highly in a monopoly position, therefore, the bad assets to focus on the four major state-owned banks. And the amount of bad loans of state-owned firms and the ratio at a dangerous level, which hindered the deepening of reform and development. Since the Asian financial crisis, many foreign banks gradually to the China Banking shares, is not only conducive to foreign advanced management experience and the introduction of innovative financial, innovation and the ability of commercial banks to enhance risk control capacity and better performing assets. More importantly, the commercial banks will help promote the progressive realization of equity diversification and create a good corporate governance structure, commercial banks increase their competitiveness. China's banks dispose of bad assets of state-owned banks: the situation of the capital injection, establishment of the core capital adequacy ratio reached 8% of financial assets management companies to handle bad assets of state-owned banks; securitization of bad assets through asset optimization and the introduction of foreign strategic investors, shareholding structure of the domestic banking sector.Based on the analysis of foreign countries (United States, Japan, South Korea) disposal of the bad assets of banks experience that the disposal of bad assets abroad to learn from China's experiences and methods necessary. However, the current use of advanced methods of disposing of bad assets in China there are still obstacles. Finally, the reform of China's banking industry measures. China's banking sector is fully dispose of the bad assets of banks can learn from the experiences, play a guiding role in the government, based on support to strengthen the government's efforts to improve the relevant legal system. Property market to be implemented structural adjustment and structural reform on a comprehensive reform, that is through the introduction of the shareholding system reform establish corporate governance institutions to create the incentive and restraint mechanisms to relax market access control, raise the level of banking supervision. Promoting mixed operations to change the existing banking system backward, so they coordinate with each other and complement each other and promote each other. And forward the department's advantages in terms of policy, with reasonable for China to improve the efficiency of the banking industry. Smooth realization of the objectives and tasks for reform. promote banking reforms, enhancing their ability to resist risks, as soon as possible so that China's banking industry to adapt to the globalization of financial markets.