China's Commercial Banks Non-performing Assets Securitization Legal Issues Discussed

As is known to us all, how to deal with the non-performing assets in thecommercial banks in China has come to be the major issue for our finance industry,which has definitely hindered the normal operation of our national economy presently.The author held the view that, in the light of the characteristics and advantages ofasset securitization, there's no doubt that it's a new alternative to securitize thenon-performing assets for solving the problem of non-performing assets.This paper was divided into four parts.Part I focused on the fundamental theory on the meaning, the systematic functionand the constitution of asset securitization in legal view of the point, as well as adoptsrelated knowledge in economics to complement and support the legal analysis, thus toprepare for the next parts in details.Part II probed into these aspects, including the status quo, the causes and thedamage of non-performing assets in commercial banks of China, the gains and lossesby using the current ways to deal with this problem and the advantages of assetsecuritization. On the other hand, the author criticized the idea that asset securitizationwas unworkable in China and analyzed the feasibility and necessity of assetsecuritization comprehensively, on the basis of typical practice in this field both inChina and foreign countries.Part III was of the most importance in this paper. The Administration of CreditAsset Securitization in Experimental Units and its complementary rules, in spite ofbeing aimed at pilot units, has reflected that the tendency of development in creditasset securitization including legislation on non-performing asset securitization inChina. In most instances, the specified regulations of credit asset securitization can beadapted to the non-performing asset securitization. These laws and relative documentshave cleared the way for non-performing asset securitization of the commercial banksin China;nevertheless, our legal environment will have to be greatly improved toregulate and systemize its operation. Referring to five respects such as the basic assets,market equity, and specific operation, this part has discussed the legal environmentprovided by the existing laws for non-performing asset securitization, involving thelegal supports, and tried to propose some suggestion to work out the problems as faras possible legal conflicts and vacancy are concerned.Part IV, with its emphasis on solving the problems, has put forward suggestionsof setting up a legal system for non-performing asset securitization and perfecting itscorresponding circumstances. The system contains formulating The Non-performingAsset Securitization Laws and securitization system in The Law of Non-performingAsset Disposition, and standardizing the existing laws and regulations. The relevantenvironment refers to cultivating the operation regime in mixed industries, improvingthe social credit and financial supervision system, developing the investment market,and establishing the intermediate market, etc.The research methods involved in this paper are theoretical, demonstration,comparison, and dialectic analysis.