Research On Credit Risk For Agriculture Development Bank Of China Jilin Branch

Agriculture Development Bank of China (ADBC), founded in1994, is thestate-owned agriculture policy bank. The business scope of ADBC is adjusted to theneeds of national economic development and its business capacity, including raisingfunds for agricultural policy businesses based on the state credibility, undertakingagriculture-related commercial businesses approved by the regulators and serving asan agent for the state treasury to allocate the special funds for supporting agriculture.The business scope has been under several adjustments afterwards. To adhere to thechange of business scope, the nature of core function which is to issue loans forprocurement of grain, cotton and edible oil seeds switched from policy business tocommercial business. However, in consideration of the importance of grain ineconomic and social domain, loans for procurement are labeled as policy-driven.Therefore ADBC has to issue loans to subjects with low capacity of risk resistanceunder social pressure, leading to the increase of operation risk. Besides the facts thatthe bad loans embedded in the system are not properly solved and ADBC undertakesthe function of policy business without the supportive policy, making the risk evenhigher.As risk is the characteristic of banking industry, the prevention and control ofcredit loans is the eternal pursuit. ADBC as an agriculture policy bank confronts theoperation risk in the fulfillment of agriculture-support function. Therefore, it iscrucial and practical to conduct research in the management of credit risk ofagriculture policy bank in a long run.Firstly there will be a brief introduction of the background and development ofADBC in the dissertation, then followed by the analysis on the classification,characteristics and the cause of credit risk. Based on previous analysis and theexperience of prevention and deduction of credit risk from foreign policy bank, measures are put forward from the aspects of function positioning, legislationguarantee, implementation and remedial measure.This essay introduces the background and development of ADBC, indicating thatas a derivative of the financial system revolution, the ADB is a financial body aimingto undertake policy-oriented agricultural credits and loans. From the establishment,the credit domains and regulations of ADB have altered ceaselessly with nationalpolicies. However, as a legal financial body the establish and management of ADBseverely lacks corresponding legal grounds, which can be witnessed in the short ofstability in tasks, the exaggeration of responsibilities and the difficulties in defendingrights. These lead to an awkward role for ADB in society. Through analysis into theJilin Branch of ADB, especially into the present situation where old and entrenchedcredit issues, frequent new risks and difficulties in preserving rights fabricate together,we addressed the causes for credit risks from three perspectives: policy, personnel andclientele. Moreover, in reference to the legal protection, structure, capital source, riskresolve of policy banks in developed countries, the essay provides measures andadvices for the resolving of credit risks in varied facets, namely the jurisdiction, legalprotection, staff quality, trust system fortification and risk compensate precautions.