The Financial Risk Analysis Of HF Guarantee Company

After the reform and opening up,the economy of China has gradually presented the nice momentum of development,especially in the 1990’s,the development of China’s economy become more and more quickly after ten years’ practices.In this situation,various industries are thriving and booming,so the number of small and medium-sized enterprises is also increasing constantly.But these enterprises’ ability of borrowing from the banks is relatively weakly because of their little size,so a kind of “financing difficulties “phenomenon has formed which cause the development and expansion of these enterprises become more and more difficult and not suitable for the development of the whole economic situation.In this case,the guarantee industry is arising.The development of guarantee industry has mainly experienced the following several major stages:(1)Initially,guarantee enterprises were established under the support of the government.In this time,whole guarantee industry was just in the phase of exploration in the forward,the number of the guarantee enterprises was not much and almost were mainly relying on the investment of government to set up.(2)Since China had joined the WTO,the private economic had been developing with high speed and the number of private enterprises were also increasing.Under this background,the guarantee industry entered a stag of rapid development and the number of guarantee enterprises was also rising constantly.(3)In 2008,a global economic crisis has out broken which is the biggest financial crisis since the 1930’s economic crisis.That leaded to the economic recession and the development of all industries walked to the stagnant stage,the guarantee industry was not immune.In this situation,the efforts of the support of the government become more and more and the government also encourages a large number of private capital into the guarantee industry,but the problem are following in the same time.(4)In the past two years,as the zhong dan hua ding events and similar events happen,the trust of the guarantee enterprises is declining in the people and the Commercial Banks is also gradually shrinking the business scope of the cooperation with guarantee enterprise.At the same time,the government has also stepped up to the strength of the reorganization of the guarantee industry.So the guarantee industry is in the phase of the cold winter at this time.Some large guarantee enterprises can survive in this cold winter because of their abundant funds,strength and the support from the government.But most of the small and medium-sized guarantee enterprises can’t be similar with the large enterprises,the short of funds has make them in dilemma,they must make a choice between two solution,continue to develop in a tough environment to greet the spring or out from the market.At this point,the small and medium-sized guarantee enterprises improving their ability of managing the risks become more important,which is the premise condition for them to through the cold winter and develop continually.The first purpose of founding guarantee enterprises is in order to solve the problem of difficult financing for private firms.So in the beginning of its founding,it naturally takes the responsibility of offering the guarantee for enterprises for financing from bank,at the same time,this responsibility is fundamental for guarantee industry to develop itself and also the cornerstone for expanding new business.However,the guarantee enterprises manage the capitals and risks,rely on the credit,so how to prevent risks becomes the primary task for guarantee enterprises to be sustainable.There is only the effective control of risks can be the best mean to guarantee the healthy and stable development of the guarantee enterprises.This paper uses the literature research method,case analysis method,on-the-spot investigation method and in combination with qualitative and quantitative method,etc.,selects the HF guarantee company which belongs to one individual of small and medium-sized financing guarantee industry and collects its basic information and financial information to discuss the financial risk of HF guarantee company by dividing the paper into six parts.The first part puts forward the research background and significance of this article and the present study situation of the financial risk of guarantee companies,and carries on the views.We can find that the research about the credit risk of guarantee companies is much,but the study especially for the financial risk is rare.At the same time,this part also expounds the thesis thought and structure simply;The second part elaborates the relevant theories about the financial risk and guarantee companies,including the theories about meaning,characteristics,classification,causes,identification and control of the financial risk and the internal control and risk management theory.Among them,financial risk which can be roughly divided into financing risk,investment risk,management risk,capital recovery risk and income distribution risk,etc.,has comprehensive,objectivity,uncertainly,duality and controllability,and the factors causing the financial risk can be divided into internal and external factors;The third part chooses HF Guarantee Company as the object of case analysis to classify the financial risk,including funding risk,investment risk,customer risk,internal risk and environment risk,etc.,by combining the theoretical basis of the second part on the premise of understanding the particularity of guarantee industry and the basic situation and the business development of HF Guarantee Company.The forth part analyze the reasons respectively which may lead HF Guarantee Company to produce the financial risk,including funding risk,investment risk,customer risk,internal risk and environment risk,etc.,so that we can put forward the prevention measures for these causes which may lead to financial risk in the later part.The fifth part states the corresponding prevent measures mainly according to the cause of the forth part has putted forward.It not only proposes the suggest which guard against the occurred or potential financial risk,but also provide reference measures for the guarantee company which has the similar risk.The sixth part is a summary of the whole article,hoping to make a certain reference function for all the small and medium-sized financing guarantee company to provide the financial risk through the representative analysis of HF Guarantee Company.