Study On Risks And Preventative Measures Of WMPs In China's Commercial Banks

A dramatic jump in livelihood and increased disposable income have been enjoyed by the Chinese people as China's economic development picks up its pace.Fixed interest rate of traditional banking can no longer serve people's need to increase wealth,which has prompted some of them to look to more efficient ways to boost their savings.Against this backdrop,wealth management products(WMPs)provided by commercial banks has gained more and more popularity among Chinese people.However,more financial complexities also arise with shift from traditionally singular fixed-and-current saving accounts to an assortment of WMPs by numerous commercial banks.And huge moral risk and adverse selection may surface as people lack sufficient knowledge toward complicated WMPs.Besides,being late comers,China's commercial banks are also weak in terms of risk management and innovation,and exposed to homogenous competitions,which all have the potential to cause risks to WMPs.In this context,top priorities of China's commercial banks come down to addressing issues of how to pursue a health development of WMPs and lower personal financial risks.Through analysis of the history and current financial environment of WMPs of China's commercial banks,this paper will shed light on how mainstream financial risks prevention theories are used in WMPs operations.Some targeted proposals are made in terms of how to improve product designing,circulation and risk assessment of WMPs,which bear some practical significance for improving overall quality of WMPs,and lowering financial risks.This paper has five parts.Part One is Introduction,which introduces history,theoretical and practical significance of WMPs of China's commercial banks.Then a classified review is performed on respects from selection of WMPs,interest rate risk,risk prevention,definition and development of the concept of WMPs,to risk categories of WMPs.Part Two will lay out general ideas of WMPs in China's commercial banks,by first defining basic concepts and categorization,then reviewing history and status quoof WMPs of China's commercial banks,and finally summarizing features and underlying problems of WMPs in China,which will serve as a foundation for Part Three.Part Three analyzes risks of WMPs and causes behinds them,with clarifying definition and categories of WMPs risks being the first step,followed by analysis of them from the perspectives of both commercial banks and customers.Part Four looks at risk prevention best practices from foreign commercial banks.WMPs originated in Swissland,whose steps were followed by developed counterparts in western countries,Hong Kong and Japan.This paper reviews strengths and weaknesses of WMPs in the US,Swissland and Japan,so as to propose improvements for WMPs of China's commercial banks.Part Five builds on reviews and analysis of previous Parts to produce policy measures for improve WMPs of China's commercial banks.