The Research Of Hypothetical Liquidation Method In The Application Of Non-performing Loans Evaluation

How to dealing with the non-performing loans is a problem which social economic development and the present reforming of economic system unable to avoid.Reasonable evaluation and disposal of non-performing assets is the key to prevent the loss of State-owned assets for the existence of non-performing assets in the State-owned financial enterprises.In March 2005,The non-performing assets assessment guidelines(trial)which issued by the China Association of Assets Appraisal have not make a mandatory regulation which is mean to the methods of non-performing assets value assessment.Thus to assume the Liquidation Method is one of the most widely used methods in the non-performing assets assessment.So,to assume that practical researching of Liquidation Method in the financial non-performing assets assessment is significant.In this paper,i analysis the Transaction Cases Comparison,Expert Scoring Method,Credit Evaluation,Assume Liquidation Method one by one which is common used in the financial bad assets assessment.Among them,for the practice of domestic non-performing assets assessment is not standard,the practice of operation is complex,in which caused of more difficult to select trading reference cases.And the parameter adjustment is qualitative analysis,artificial subjective factors has a great influence on the result.So the Transaction Cases Comparison is using less in practice.The Expert Scoring Method is also using no more in financial non-performing assessment.The level of experts,the scientific of table,the qualitative of human subjectivity in several rounds assessment will have great influence on the final evaluation results.Each index analysis of Credit Evaluation is based on financial statements and related information which is provided by the borrowers.In practice,the lenders may provide false financial statements for selfish purposes.It amplified risk and limited application of Credit Evaluation Method in the of financial non-performing assets valuation practice which is caused by relying on financial statements and data that the borrowers provided.Assume Liquidation Method is a commonly used method in the practice of non-performing assets assessment.Compared with the former three methods,the advantage is mainly on the reasonable of evaluation process.And the differences of operating conditions and different evaluation purpose which is mean to the evaluated debt enterprise's is also its advantage.There are three different liquidations to evaluate.It is mandatory liquidation price,orderly liquidation prices and continued prices respectively.The fifth chapter of this paper is verified through applied to specific case in practice.