China's Policy Banks Assets Securitization

Policy banks are non-profit financial institutions established by support of the government. They are based on national credit and in line with the Government's social economic policy, working in a particular area of business, directly or indirectly, to achieve the policy objectives. Policy banks in China have balanced economic development and made tremendous contributions to the social harmony since their establishment, however, there has been problems on liquidity among them such as lack of assets and unbalance of asset-liability ratio.This paper, at first, take the features of assets and liabilities in policy bank into account and analysis, pointing out that the long-term assets and liabilities of the contradiction between short-term is the underlying causes of the problem in liquidity; and then combine the principles of asset securitization, make in-depth analysis of the necessity and feasibility of the policy bank carrying out on the asset securitization ,concluded that asset securitization is the an effective solution to better policy banks balance sheet financing and liquidity structure, and it is suit for the current policy banks to carry out the asset securitization, and furthermore pointed out that the asset securitization of policy banks is able to promote better implementation of macroeconomic policies, and to promote the significance of improving the capital market; Then summed up the current financial crisis revealed the risk of asset securitization for the policy banks asset securitization risk control provides an important reference and policy recommendations, policy banks is drawn to control the risk of asset securitization.At last, from the analysis of the asset securitization in National Development Bank and sub-loan crisis in the United States, it provides creative ideas and suggestions to improve policy banks' asset securitization in China. It especially visualizes setting up a wholly-owned subsidiary of policy bank and designs credit enhancement based on real options.