A Comparative Study Of Private Equity Investment Of Commercial Banks Between China And America

The investment business of private equity(also know as PE) of commercial bank workedas the spring breeze. In American, it is mature, while in China, it is new. Considering thechinese capital market openning to the world under the current situation, the governmentissued the17th document to encourage commercial banks to develop private equityinvestment business. It is necessary for China’s commercial banks to use the matureexperience of American for reference and explore a set of suitable pattern for their ownbusiness.The bank has a function of created derivative money which occupies an importantposition in the economic system. In addition to this，Commercial banks must play anexemplary role in economic transition, which should not make a slightest mistake.Commercial banks have a lot of capital, have a comprehensive information platform, havepreferential policy support, have a professional management team, also have outstanding riskcontrol ability, no matter money or investment, China’s commercial banks have congenitaladvantages that others would not match with.Through investing in emerging enterprises, Commercial banks can use retainedinformation repetedly. This business have synergistic effect：the investment in private equityof commercial bank issued a positive signal to outside investors. commercial banks can alsoprovide follow-up loans to commercial banks, which provides another way and motivation forPE investment. Loans can be derived from other banks, which in turn increases the credibilityof banks and investment scale. With capital advantage, information advantage and resourceadvantage in one, commercial banks are launching the PE business, and become the mainforce of the effective strength of economic transformation in capital market. The governmentissued a document also admitted that the opportunity of developping PE business ofcommercial banks is so mature that mixed managementbe is imperative.The most recent policy documents combined with the current international environmentand situations forcast that it is urgent and necessiry for commercial banks to develop PEbusiness in China. After that, the document gives a detailed description of the motivation of commercial banks to develop the PE business, and do an analysis about the effects ofencouraging commercial banks to develop the PE business. Finally, this paper provideguiding suggestions for commercial banks and regulators.