Information asymmetry is the profound reason for the bad assets ofbank system. For the purposes of both providing sufficient loan supportfor economic growth and keeping stable self operation, the problem ofasymmetric information must be resolved. Based on the application oftheoretical models related to moral hazard and adverse selection thatoccur between banks and businesses, and among banks at different levels,this paper analyses the cause of bad asset from the perspective ofinformation asymmetry. The key solutions of keeping away fromfinancial risk depend mainly on eliminating the problem of informationasymmetry. At the same time, to set up reputation mechanism andeffective prompting mechanism, as well as construct good social creditenvironment are equally important. To increase supervision transparencycannot be ignored. |