Risk Management And Control Of Consumer-Loan Asset-Backed Securities

Asset-backed security has become a hot issue in market since China restarted the pilot scheme of loan asset-backed securities. Consumer-loan asset-backed security is a classic type of all the ABS products and has just started in Chinese market. The importance of consumption in economic development has gradually been recognized in China and government has recently issued supportive regulations and policies. It can be seen in the future that China will witness a booming increase in consumer-loan ABS.But the problem for China is that there is little experience about consumer-loan ABS and the ability of risk control and management is of significant importance for its development in China.This research is aimed to analyze different kinds of risks related to consumer-loan ABS and accordingly give specific suggestions of risk management. Then there is a case study of Pingan No.1, the first consumer-loan ABS product in China, by analyzing and evaluating the risks and measures it takes to manage and control risk. To conclude, the asset pool of Pingan No.1 has good quality and there exists comprehensive and effective risk management and control activities. The shortcomings are that there is a geography concentration for loan assets and the term for assets and ABS does not match. In general, the overall level of Pingan No.1 is considered to be at a low level.This research provides a complete structure for analysis of consumer-loan ABS. The case is updated and prospective and therefore can shed some light on the way of consumer-loan ABS in China.