Study On Big Enterprise Group Loan Concentration Risk Of Commercial Banks In China

According to official from China Banking Regulatory Commission, nowadays seventy-to-eighty percent of bank loans in mainland go to big enterprise groups and banks would undertake great losses if the risk of big enterprise groups break out. So we should pay attention to concentration-risk of big enterprise group loans of China's commercial banks. Small and medium enterprises are the main object of credit rationing because of their comparative weakness. Commercial banks pour their loans to big enterprise groups under the consideration of return-cost analysis and pursuit of bigger asset scale and the risks of small and medium enterprises. In the result of negotiation inequality and banks'defect in risk management, there are a lot of problems related to big enterprise groups loans such as diminishing return, information asymmetry, loan appropriation, supervision difficulty, etc. So commercial banks should strictly conduct the three examinations of big enterprise groups loans (namely the investigation before granting loans, the checkup when granting loans and the examination after granting loans) and strengthen the management of group clients loans to reduce information asymmetry risk. Commercial banks should also pay attention to the business-operation risk of big enterprise groups under the circumstance of economic recession, especially big enterprise groups in the over-supplying industries. Commercial banks can diversify the concentration-risk of big enterprise groups through the mechanism of credit derivatives. Commercial banks should vigorously develop small and medium enterprises loans because return and opportunities from big enterprise group are diminishing.