Private Economy To Participate In Bad Assets Of Banking Research

Since 1990s, especially after the Southeast Asian Financial Crisis, all the countries have paid great attention to the problem of bad assets of the financial organizations. After considering the domestic situation seriously, our government established 4 assets management companies in 1990 according to the international tradition. They are"Huarong","Cinda","Changcheng","Dongfang"whose function is to handle the bad assets of the 4 state-owned commercial banks. Up to 30th Sept. 2003, the 4 assets management companies have totally dealt bad assets around 4154.68 hundreds million (without the political debts turn to stocks), accounting for about 30% of the book value, called back cash up to 861.91 hundreds million and the rate of it was 20.75%. Although the achievement was outstanding, we have to realize that the situation is still pessimistic: the first bad loan which was striped off by the 4 big state-owned commercial banks was nearly 1.4 thousand million and the left of the bad loan is still 1.8 thousand million. The rate of the bad loan is up to 26% currently, which has a long gap between the international standard (8%). Therefore, to facilitate the progress of handling the bad assets is urgent. So, better work out the self-employed business becomes more important during the progress. Nowadays, over 80% of the economic increase comes from self-employed business, and, it also provide over 90% of the working opportunities. However, private business has very unsatisfied status in the process of dealing the bad loan compared to its economic status. Strongly increasing the rate of private business in the field of dealing bad assets is an efficient way to fasten the progress and confront the tremendous foreign financial organizations.This paper has done lots of positive discovery in the field of private economics participation in the deposit of the bad assets, and presents the idea that when deposing the bad assets of state-owned banks, we should totally get rid of the prejudice of proprietorship and implement a more direct wise which can introduce the participation of the private economy. For instance, the bad assets can be sold to the private enterprises or under private enterprises trusteeship, and the state-owned companies can establish the joint venture company or issue the bonds with the private companies as well. Meanwhile, various financial organizations should introduce more products like << Financing Hypothecate Contract>>,<< The Object Loan>>which are able to provide the self-employed companies convenience in financing when deposing the bad assets.The paper mainly uses the method of listing when doing the research of private economics participation in the deposit of bad assets and presents the relative advices to the problems they are facing while use the comparative method and number when doing the analysis to its current situation.