The Application Problems And Countermeasures Of Chinese Commercial Banks’ Mezzanine Financing Business

Since the1980s, with the development of liberalization and globalization of the financial sector in developed countries, the financial instruments have developed rapidly. Making financial separation of operating system in the world’s major economies is difficult to continue mainstream status. Mixed operation to replace the separate operation is become an irreversible trend. Meanwhile the demands of customers on financial products are diversified and differentiated with the development of economics, and put forward higher requirements for financial services. Commercial banks have to accelerate the pace of business innovation, provide high-quality financial services, like project financing, financial advisers, restructuring mergers and acquisitions and so on. Then they can truly participate in competition of quality customers. Commercial banking and investment banking within the financial institutions cross-complementary, integrated operation in the business is the development trend of the contemporary international banking. Mezzanine financing as one of private equity investment business has flexible structure. China’s financial environment is separate supervision, commercial banks through mezzanine financing involved in high value-added direct equity investment business with high feasibility. Not only to broaden the channels of intermediate business income, more importantly is that it can accelerate the pace of comprehensive management, and enhance their competitiveness.Against this background understanding of mezzanine finance, learning how to use innovative financial instruments. Analysis of commercial banks to carry out the mezzanine finance business is able to adapt to the rapid development of the economic globalization. The problems in the practical application of China’s commercial banks, causes of the problems and appropriate measures, these are the goal of this thesis. Firstly, through documentary research I review and comment mezzanine financing business research literature both china and foreign. Analysis of domestic and international research results and inadequacies, and raised the research background and significance of the thesis.Foreign academic circles on the choice of corporate finance and its influencing factors have done a lot of theoretical and empirical research. Focus on the micro level to analyze the reasons for the formation of mezzanine financing and various means of financing, use case analysis the actual role of mezzanine financing. In China, Zhang Li and Wu Kai think that mezzanine financing as a financing innovation is the bridge of the commercial banks from traditional banking business to investment banking, and mezzanine financing business in a great deal of practical and feasible.Then through the method of descriptive research to introduce the concept of mezzanine financing, characteristics, form, interest return and applicable conditions. Proposed the theoretical basis of mezzanine financing with combining the point of view of domestic and foreign scholars, they are pecking order theory, agency cost theory, control right theory and signaling theory. Analysis the background, causes and basic approach of China’s commercial banks to carry out the mezzanine financing business, and proposed the problems.Including government intervention excessive and imperfect policy, the missing of industry regulator and specification, exit difficult, source of quality projects is scarcity, facing many risks, capital restrictions for the financing of commercial banks,and so on. From the points of view as the legal system, capital markets, credit rating system and commercial banks analysis the causes. Mezzanine financing is a new means of financing, there aren’t corresponding policies and regulations, relevant laws and regulations are not clear, and Chinese capital market is not perfect. More importantly, China’s commercial banks have some problems.For example, Mezzanine financing business is immature, lack experiences of business design and risk management, and often emphasis on income and ignores the risk. Finally, use the experience method, describing the practice of the United States and Europe.These countries amend specifically legal to help commercial bank to make mixed operation, government involvement in the development of PE, combined with multi-pronged closely monitor, mezzanine finance business matures of Europe and the United States are matures. Summary of the practices of mezzanine financing business of commercial banks in Europe and the United States, on the basis of learning from the advanced experience, according to the actual situation of China’s commercial banks proposed views. It is necessary to improve relevant laws and regulations, establish policy protection mechanism, and form an effective capital market system. To build advanced risk control concept, use sound risk control procedures, form highly qualified management personnel. The commercial banks should take effective measures to develop the mezzanine financing business. For example, recruiting and training outstanding professionals, and to establish strategic alliances, mergers and acquisitions or establish trust companies, etc.Mezzanine financing as an important financing has dual characteristics of equity and debt, ought to be developed in China. China’s commercial banks have to adapt to the changes of financial market, to survive and develop in the fierce competition, adapt to the trend of mixed operation, mezzanine finance business is a good choice. In summary, China’s commercial banks to carry out the mezzanine finance business have reality and feasibility. I believe in the near future, China’s commercial banks will play an important role in the development of mezzanine financing, and will be mainly institutional investors of mezzanine finance products.