Research On Developmental Strategy Of China’s Credit Assets Securitization Products

The banking industry is the most important component of the financial system inwhich the credit assets status plays a decisive role. At present, there are a series ofstructural problems, that the high ratio of non-performing assets, the low ratio of capitaladequacy as well as lacking of borrowers and so on. These issues gravely restricted theimprovement of liquidity, safety and efficiency of commercial bank credit assets.Therefore, the optimization of credit assets structure have vital role in dissolving risk ofthe financial system and strengthen the international competitiveness of banking and eventhe entire financial industry. Assets securitization, which the most rapid development offinancial innovation tools since1970s, is an important means in optimizing the creditstructure of assets. However, the lagging far behind of China’s securitization developmentis not consistent with the urgent requirement of financial reform and innovation in ourcountry. For those reasons, the study on the operation mode of the securitization of creditassets in China is significant both theoretically and practically.Firstly, the thesis expounds the connotation of asset securitization, and generallyintroduces the specific operation flow of it. Secondly, by summarizing the development ofbanking institutions as well as it’s challenges under the Basel III accord, reveal thenecessity of the innovative financial instrument in consideration of it’ s features that directfinancing, spreading risk and raising capital efficiency. To obtained inspiration from theexperience in developing credit asset securitization of United States where is the cradle ofassets securitization, the thesis tests the effect of the asset securitization to bank’s relevantvariables using the panel data of US bank holding corporations by Granger causality testmethod. The result of empirical research turns out that credit asset securitization enablesbanks to increase liquidity, reduce financing costs, enhance profitability and optimize loanportfolios.China has began to issue credit assets securitization products since2005butpresent in the aspect of small range of underlying assets, immature operation andilliquidity. Combined with the practical situation of China, the thesis analyses the causes from legal, institutional and market environment aspects, also, discuss the practice of assetsecuritization in credit enhancement and rating. Finally, based on the conclusion of all theresearch above, the thesis proposes corresponding policy suggestions and developmentstrategies internally and externally.