The Innovation And Supervision Of The American Commercial Bank's Obsa

Off-Balance Sheet Activities (hereinafter called OBSA) plays a more and more important and remarkable role in the business structure of modern commercial bank. Since the 80s of the 20th century, great changes have taken place in the financial environment of western countries. With the financial globalization, economic integration and less financial supervision, the difference among the business operated by financial structures is not obvious, The OBSA, which has a high yield, few requirements for capital and can avoid risks, has been an important development strategy of western banking industry. The percentage of OBSA of 28 international banks including CITI GROUP and BANK OF AMERICA has increased from 48.5% in 1982 to 76.8% in 1998. Besides the high profit brought by the OBSA, it can also improve the commercial bank's service for the society. The America, with the highly developed modern financial market, has all kinds of new financial innovation instruments. But behind it, risks accumulated. The imbalance between the innovation and the supervision make the mature market system which the America are proud of being the original of the crisis. The reasons behind the crisis are particularly important for our country. Among the reasons, the focus is the supervision deficiency of OBSA innovation in commercial banks. In China, in order to adapt the international and native increasingly vigorous financial market competition environment, the developing of OBSA has become the inevitable but reality choice for commercial banks. Though the traditional business of commercial bank is asset-liability activities and interest income is still the main source of the operating income, the OBSA is developing rapidly in recent years. However, there are still great disparities compared with the western countries. Through deeply analyzing the OBSA innovation and supervision of the American commercial banks, this paper provides some valuable exploitation for how to develop our country's OBSA, consummate supervision system and avoid innovation risks. The paper has 4 parts.The main contents are:1,Mainly discussing and analyzing the OBSA innovation theory of commercial banks. The OBSA has the same meaning with that of the intermediate business in China. Then the hypothesis explaining the developing OBSA are introduced, through which we can see the importance of developing OBSA. The source of OBSA innovation theory of commercial banks is the innovation theory of Schurmpeter and his following financial innovation theories. Therefore, the branches of Schurmpeter innovation theory are introduced.2,This part analyzes the background and development of the OBSA of the American commercial bank and finds out that change of system and the banks'strategy are the main reasons for the development of OBSA. Then the developing trends and some OBSA innovation products are introduced, such as asset-securitization,derivative business and investment banking.3,Firstly the categories and characters of these risks caused by OBSA are analyzed and studies. As the risks are born with the innovation, the bank's own supervision upon the innovation as well as the supervision from the government are all very important. And the supervision deficiency of OBSA innovation is discussed through the bankruptcy of Barings Bank. Then there is a game analysis of supervision and innovation. We can conclude the relationship between innovation and supervision is the repeating game process of supervision, innovation, supervision again and innovation again. Finally give some specific advice to strengthen the supervision of OBSA innovation through analyzing the reasons of the crises.4,Through analyzing the development of our domestic commercial bank OBSA and the comparison with western commercial bank in the innovation , we find there are some problems existing, such as the immature of the market and the supervision system, shortage of professionals etc. The advance thoughts and methods of OBSA innovation in American banks and the lessons in the crisis are used in analyzing the OBSA innovation in domestic commercial banks to explore a road suitable for their development. First we should put the OBSA in a more important place. Furthermore the innovation of our commercial bank's structure is also necessary. Though the great disparity compared with the western commercial banks, the crisis told us we must avoid over-innovation in future business development and the balance between innovation and supervision is the most important.