Research On Risk Management Of Commercial Bank In Public-Private Partnerships

In recent years, the financial pressure faced by Chinese government increases from time to time, the old financial platforms of local government are getting out of stage and replaced by Public-private Partnerships. In 2015,1043 PPP projects with about 2000 billion yuan invested were established by the related government departments. However, commercial banks, as expected to be one of the major fund providers of PPP projects, did not participate in a high level due to potential pressure from the combination of legal risk, market risk and operation risk, lack of both the knowledge and the measures in preventing the risks. Therefore, it is urgent for commercial banks to analyze the risk features in PPP projects and study the prevention measures.With the sources of risk, types of risk, risk sharing and prevention measures for commercial banks involved in PPP financing projects studied, the risk prevention measures are suggested, which may have positive impact on lowering the bad debt ratio, raising the risk management level, increasing social capital confidence to participate in PPP financing project and contributing to the economy growth. The major contents are as below:(1)Based on the summarization of relevant literature at home and abroad, the theories of risk management and PPP project risk management for commercial banks are systematically studied. According to the financing structures of PPP projects and the financing model of commercial banks, the risk sources of commercial banks are divided into the internal sources and the external sources. With the risk feature of PPP projects analyzed, the risks of commercial banks in PPP projects are divided into the sole control risks and the joint control risks, and then the further division is made.(2)Through the establishment of the risk-sharing game model and the risk prevention game model for commercial banks, the measures of commercial banks for both risk-sharing and risk prevention are discussed. It is suggested to prevent the risk of commercial banks based on both risk-sharing and risk prevention. Furthermore, it is necessary to establish suitable risk-sharing mechanism, make better financing agreement, choose fine PPP project, organize professional management institution for commercial banks in PPP projects and design multi-financing channels.(3)With the theories put forward in the paper applied into the PPP financing project, where Postal Savings bank in China participated in Qingdao high-speed rail (Weifang section), both the type of risk and the ratio of risk-sharing for the bank are discussed based on Analytic Hierarchy Process, and the theories are well illustrated by the results.