The Effects Of Commercial Banks’ Loan Assignment On Banking Systemic Risk

The subprime mortgage crisis happened in United States in 2007 brought a great effect to the world economy. Most of the countries in the world did their best to make a recovery to their economy system in so-called post-crisis era, by financial reforms. The crisis urged us to fully understand the importance of credit risk management while the change of the economic environment all around the world also sounded the alarm to China’s banking industry. With the further implementation of China’s financial reform, loan assignment has become one of the "upstarts" in China’s credit risk transfer (CRT) market, hence how to effectively prevent and control adverse effects brought by China’s commercial banks’loan assignment on bank systemic risk is one of the issues the authorities need to be careful to treat.In this paper, we mainly focus on the relative analysis on China, America and South Korea respectively and the target is to estimate to what extent the loan assignment behavior can bring to the bank systemic risk according to the historical experience of America and South Korea, as well as the quantitative analysis of China. According to the regression coefficients, the banks that signed the "Loan Assignment Agreement" and took the relative actions would have several negative effects as well as little contribution to the long-term average earnings. As to say the banking systemic risk results from loan assignment, it is little in the short time and will be even larger in the long-term, what is more, joint-stock banks benefit more than state-owned ones.According to the analysis, it is the time for China capital market to develop loan assignment industry, which is also consistent with the demand for the financial reform in China. Compared with America and South Korea, it is suggested that loan assignment is the product when capital market developing to a certain condition, is one of the tools used in the CRT market and now the aboving two economies has focused on the ABS industry which has gone further than loan assignment, and this direction may be China’s too. In order to make the loan assignment develop healthily, there are some suggestions given by this paper such as the more supervise from regulatory agencies, investment diversification, the standardization of the control system and the transfer of credit which are mainly to provide the necessary protection for the healthy development of China’s loan assignment market.