State-owned Commercial Banks Non-performing Assets Valuation Based On The Assets Recovery Rate Method

The 2008 US subprime mortgage crisis and the subsequent debt crisis showed that: the accumulation of a large number of non-performing assets not only impact the banking and financial market, but also bring huge risks to financial market, especially to development of the whole national economy. In recent years, with the rapid development of banking sector, non-performing assets they held also on the rise, especially state-owned commercial banks. State-owned commercial banks are the main body of China’s banking sector and have an important strategic position in China’s economic reform and development. A reasonable assessment of the value of non-performing assets of state-owned commercial banks, whether to promote the stable development of state-owned commercial banks or to asset disposal of management companies has a great significance. However, due to the particularity and complexity of bad financial assets that traditional assessment methods are not fully applicable. How to overcome the drawbacks of traditional assessment methods, improve and innovate assessment methods, are essential to ensure the fairness and reasonableness of financial bad assets assessment.This Article starts on traditional asset evaluation methods, extending to the four commonly used commercial banks non-performing assets valuation methods. Based on the comparative analysis of applicability and limitations of these assessment methods, put forward using the asset recovery rate method to measure the non-performing assets of state-owned commercial banks, and have an empirical analysis according to China Construction Bank.The innovations of this paper are as follows. First, put the traditional non-performing asset valuation method and the current commercial bank assets valuation methods together to have a comprehensive comparative analysis, in order to explore the applicability and limitations and look for improvements. Secondly, the paper makes a lot of data collections and analysis, including the status analysis of non-performing assets of commercial banks, and the case analysis of CCB asset packages, all the data is authentic. Finally, by the quantitative analysis, find a quantitative evaluation method of non-performing assets, perfect the state-owned commercial banks’ bad assets assessment ideas and methods.