The Study Of Japanese Banks’ Bad Assets

The bad assets of banks are often referred to as bad loans, foremost amongwhich are the bad loans. Bad loans mean the borrower can not be scheduled,according to the amount to repay the loan, or have signs of surface thatborrower can not repay the loan principal and interest. Since the1980s, withthe financial globalization, liberalization, financial innovation and thedeepening of development, and many countries in economic transition, therebecome huge bad assets that are harmful for the steady and safe of banks,and threatening the stability of entire financial system and national economicoperation. The gradual accumulation of the bad assets of China begins at theopening up policy in the1970s and the reform of the market trend of the early1990s, and in1999the state-owned commercial banks’ bad assets ratereached34percents. The existence of these bad assets, severely restrictedthe competitiveness of China’s state-owned commercial banks, threatening thecountry’s economic and financial security. With China’s booming of economy,the financial system has become increasingly important in the nationaleconomy, and how to effectively prevent and resolve bad assets has becomean important topic in China’s academia.To resolve the bad assets in China, we should actively learn from theexperience of the international. Among them, the Japanese experience of badassets is very valuable to China, because Japan’s bad assets also arise fromthe economic reform period. With similar historical background, experienceand lessons learned in Japan not only enables us to avoid detours, and tomore effectively deal with bad assets. In the article, Japan is the object of study,in the Chapter II to Chapter V, the generation and development of theJapanese bad assets and the formation of the causes, treatment and effects are discussed in detail, summed up the lessons learned to the dealing with badassets in Japan. The sixth chapter states the current situation, causes andmeasures of China’s bad assets. According the Japanese dispose of badassets to summarize the main issues to resolve bad assets in China, and cite afew more feature approaches handling of bad assets in the last. The finalconclusion: in order to effectively prevent and resolve bad assets, it isnecessary to create a favorable environment, but also need the fundamentalreform of corporate governance mechanism of the state-owned commercialbanks and enterprises. View of the formation of bad assets in China has itsown particularity, we should combined with the actual situation of our countryto learn from the experience of dealing with bad assets on the international,actively explore program of technical and institutional innovations for China’snational conditions. Only through the concerted efforts of all parties, we canpromote and improve the prevention and disposal of bad assets of China’sstate-owned commercial banks, and defuse financial risks, promote healthyand orderly development of China’s banking industry.