| This paper analyses the situation, harm and cause of bad loans in state- owned commercial banks on both theoretical and practical point of view. Measures to solve current bad loans and curb potential bad loans are also put forward on the basis of foreign experience and domestic realities. This paper consists of four parts. The first part describes the present situation of bad loans, predicts its trend and analyses its harm to the national economy. The second part points out the main causes of bad loans, including both institutional and managerial factors. Institutional factors include excessive intervention from the government, vacancy of property rights in state-owned enterprises, underdeveloped capital market, imperfect market where state-owned enterprise can hardly withdraw, and so on. Managerial factors refer to lack of a unified credit managerial system that connects responsibilities with rights and benefits in state-owned commercial banks, imperfection of collective examining and approving system, deviation in operative thoughts. The solutions to current bad loans are discussed in the third part. Financial support including fax, debt, national credit and policy resource support is, according to the author, a major channel to solve bad loans. The fourth part proposes measures to curb potential bad loans, such as: (1) to standardize the government behavior and prohibit governments from intervening in enterprises routine management; (2) to reform the property right systems of state-owned commercial banks by introducing shares in order to control nner control problem; (3) to combine the precaution against bad loans with the reformation of state-owned enterprises; (4) to rebuild the relationship between governments and banks; (5) to set a good credit environment;(6) to improve financial supervision and management of the central bank and inflict more severe punishment on the violators; (7) to consummate internal management in the state-owned commercial banks. |
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