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Analysis Of Chinese Commercial Banks To The Development Of Off-balance Sheet Business

Posted on:2004-06-16Degree:MasterType:Thesis
Country:ChinaCandidate:L YangFull Text:PDF
GTID:2206360095451085Subject:Systems Engineering
Abstract/Summary:PDF Full Text Request
The Off-balance-sheet (OBS) activities in commercial banks of developed countries, first employed to adapt to international financial market changes in 1960s and 1970s, are now matured banking activities. However, commercial banks of China have just started to develop the OBS activities, so the OBS activities in China are underdeveloped. Existing literature shows that the OBS activities can be defined in either narrow or broad sense. This thesis focuses on the OBS activities defined in narrow sense, which are risky and excluded from the balance sheet. The OBS activities, according to their characteristics, can be classified into three categories: the issuance of OBS guarantee, loan commitments, and derivative instruments.Through the analysis of the origin and quick development of the OBS activities in foreign commercial banks, the necessary subjective and objective conditions contributing to the development of the OBS activities are provided, i.e., commercial banks are willing to develop the OBS activities and objective conditions in technology and financial market needed by the OBS activities exist. By comparison of the economy and banking of China, it is found that those conditions are not fully met in China, which results in the underdevelopment of the OBS activities. Meanwhile, based on the perspective of the changing conditions contributing to the development of the OBS activities, a conclusion is drawn that enhancing the development of the OBS activities in commercial banks of China is necessary and feasible. Then, from the three categories above, some typical activities suitable to develop in China are selected: Letter of Guarantee, Standby Letter of Credit, and Loan Sales; Note Issuance Facilities; Forward Contract, Financial Future, Option, and Swap. After doing some research work in present situation and obstacles of developing these activities, especially in high risk and the methods of controlling it, the thesis gives some feasible advice. At last, the thesis points out some problems to be solved in the future.The innovations of this thesis are as follows. First, it offers a newperspective to analyze the OBS activities. Most existing literature concentrates on the OBS activities defined in broad sense, which analyzes both non-risky and risky OBS activities. While this thesis focuses on the OBS activities defined in narrow sense, paying much attention to the high risky feature of the OBS activities. Second, this thesis applies a new method to analysis. When analyzing the underdevelopment of the OBS activities in China, it not only discusses the present situation of China, but does comparative research work, which gives a more complete and accurate analysis. Finally, this thesis builds a new framework of research. It regards the OBS activities as a system more than a kind of banking activities. The thesis begins with a macro-analysis of the OBS activities, which pays much attention to their development process and the unity of the OBS activities system. After that, the thesis turns to analyze individuals, i.e., the three categories above, researching elements of the system. In this way, the goal of making the OBS activities a system and harmonizing elements of the system is achieved.
Keywords/Search Tags:Off-balance-sheet activities, Commercial banks of China, Underdevelopment, Issuance of OBS guarantee, Loan commitments, Derivative instruments, Risk control
PDF Full Text Request
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