A Studay On The Risk Management Issues For The Cooperation Between Bank And Financing Guarantee Company

SMEs occupies a very important economic status in China, it contributes more and more to Chinese economic growth. But SMEs loans money from bank, is difficult and this problem hinders the developing of SMEs. With the help of the financing guarantee companies, SMEs can loan money from banks easier. To some extent, it mitigates the financing pressure of SMEs. Banks migrates the credit risk to the financing guarantee companies in the financing guarantee business, but as we know, the financing guarantee companies does not have effective risk diversification system, so the financing guarantee industry becomes a high-risk industry and how to manage the risk becomes the accepted problem. Financing guarantee industry is still on the initial stage in China, and in this stage the financing guarantee industry expands so rapid that leads to a lot of risk events. The risk events will hinder the sustainable development of the financing guarantee industry. Especially the risk case of Hua Ding guarantee group which happened in2012had sounded the alarm to the financing guarantee industry and how to manage the financing guarantee risk has become the primary problem which restricts the development of Chinese guarantee industry.In this article, we will select the case of Hua Ding guarantee group as the study object and we will sort out the background, course and the effect of the case in detail and then we will search the reasons which cause the risk event. At last, we will give some advices on how to manage the financing guarantee risk.The content of this article is divided into three parts.First of all, the literature review section. In this section, we mainly cited the achievements of the financing guarantee research from foreign scholars. Then we will introduce some developed countries’financing guarantee institution. Then we will introduce the mainly achievements about the risk management of the financing guarantee which put forward by Chinese scholars.Secondly, Case analysis section. In this section, we will analyze the risk event of Hua Ding guarantee group carefully and sort out the background, course and the effect of the case in detail. And then we will analyze the risk management problems which reflect by the case from the aspects of banks、Hua Ding guarantee group and government. At last we will analyze the reasons which cause the problem of the risk management form two aspects. On the one hand, we will analyze the financing guarantee system of China and indicate that the imperfect of Chinese financing guarantee system is the fundamental reason of the risk management problems. On the other hand, we will analyze the reasons from the aspects of banks, Hua Ding guarantee group and government.Third, suggestions section. In this section, we will put forward some suggestions about the risk management of financing guarantee from three aspects. And these aspects include banks, financing guarantee companies and government. Too the banks, they should carry out the risk management mechanism completely. Too the financing guarantee companies, they should pay more attention to build the risk management mechanism, introduce more guarantee risk management expert from the market and enhance the ability to resist the guarantee risks. Too the government, they should reform the financing guarantee system and build a scientific risk diversification mechanism, such as proportion guarantee mode, re-guarantee mode, counter-guarantee mode and so on.