The Research On The Cooperation And Risk Management Between Commercialbanks And Financing Guarantee Corporations

With the development of market economy in China and the improvement of life quality of people, the demand of fund of both enterprise and individuals is increasingly growing. As the providers of Credit funds, Commercial banks meet the demand of funds through issuing the loans to a company and an individual. In the meanwhile, there is a strict requirement for the borrowers. Small and Medium Sized Enterprises with relatively low Credit rating or no effective Mortgage guarantee may find it difficult to get the loans from banks. In this case, Financing Guarantee corporations that provide guarantee for borrowers are emerging as itrequired by times.Financing Guaranteecorporations, as the credit agency institutions, aim at promoting the level of credit rating by providing guarantee for borrowers, thus reaching the level of loan requirements of banks. It connects the relationship betweenSmall and Medium Sized Enterprises (SMSE)individuals and commercial banks, which improves the financing condition of SMSE and individuals. The rise of Financing Guarantee corporationscomes with the credit business of commercial banks and, as a result, the corporation with banks is the basic part of its survivals. Furthermore, the win-win condition among commercial banks and Financing Guarantee corporations and borrowers can be achieved through the cooperation; therefore, the co-operation of commercial banks and Financing Guarantee corporations is necessary.In recent years, the Guarantee industry developed rapidly because of its increasing demand and increasing support from Government. However, the lack of mature cooperation model and way of risk management makes the risks become increasingly obvious during the process of cooperation and even lead to the cheat of loans and the loss of repaying ability. This blocks the development of their cooperation relationships, which can be harmful to the healthy development of the establishment of Credit system and business of commercial banks. This paper is based on the theory and practice of cooperation between SMSE and Financing Guarantee corporations. By analyzing the practical condition of the cooperation, this paper mainly take research on the cooperation model and risk. The main elements that affect the cooperation of both sides areanalyzed so that the recognition of risk and risk control measurements can be explored, which can be educational in terms of the risk management of cooperation.In the first place, cooperation model is firstly analyzed and then the features of cooperation model in different aspects are analyzed. Based on this, combined with the current situation of the cooperation, the cooperation model preference of commercial banks as well as the consequences on the cooperation relationship is analyzed. Secondly, the deep research is carried on the cooperation risk on both macroscopic and microscopiclevel. The different kinds of risk during the process of cooperation and the causing reasons from aspects of Government policy and social credit system and the internal control are concluded. In order to research the topic deeply, practical cases of cooperation inShandongProvince and the case of Huading are chosen, which discusses in the aspects of cooperation model and cooperation risk in detail.It is concluded from this study, it is believed that Financing Guarantee corporations provide vital connections between borrowers of SMSE and individuals and commercial banks. The cooperation is also the inevitable result of social development and business need on both side. It also plays a positive role on promoting the development and effectiveness of bank business and reducing the risk of credit rate. During the process of the cooperation, because of the unregulated rules and the lack of externalsupervision and unregulated behaviors of Financing Guarantee corporations and even lack of internal controls in commercial banks, there are different kinds of risks under the cooperation. Among the risks, the broken of fund chain caused by unregulated behaviors of Financing Guarantee corporations and systemic risks caused by the loss of Compensation ability are the most serious ones. As a result, effective ways of protecting risks are essential under the cooperation process. The cooperation between two sides should be based on the Government rules, credit system, and management strength and regulated operation. Then, based on risk management, steps of enforcing the two-side cooperation can promote the cooperation to a healthy way of development.