Case Study On Risk Management Of Guarantor Business In GH Company

As the system and degree of development of the market economy in China are improved step by step,middle and small-sized enterprises(SMEs)are playing a more important role in promoting the economic development,promoting the innovation and maintaining the stability of the society.To achieve a rapid self-development,SMEs need external nancing.However,based on the current policy and system of China,and the insufcient self-condition of SMEs,nancing difculties are becoming the bottlenecks of the development of SMEs and an important reason why sustained and rapid economic growth is restricted.With erce competitions between SMEs,the net asset prot margins of most SMEs are low and the accumulation of prots can not meet the requirements of the rapid development,which make the bank credit capital becoming the main source of the operating fund for SMEs.But under the background of development lag of credit market in China,the bank credit funds are mostly provided for the large enterprises.Besides,the information asymmetry between SMEs and the banks leaves SMEs in a peculiar predicament for bank nancing.Under such circumstances,guarantee corporations emerge as the times require.The emergence of the guarantee corporations effectively mitigates bank credit rationing and provides a more effective way to solve the nancing difculties of SMEs.The guarantee company is a non-bank financial institution which provides the guarantee service as the main business.It is driven by the government to solve the market demand of the market transaction subject in the information asymmetry,the unequal right and the financing channel.As the guarantee industry in China started late,there are many problems in the guarantee industry and guarantee corporations are facing many risks.Guarantee corporations are different from traditional industry.They are operating risks,where risk management is the top priority.The form of risk faced by the security company is very complex.For the guarantee company,the occurrence of each guarantee business is contingent liabilities,and each of the contingent liabilities may become a real liability,if the borrower is unwilling or not in accordance with the contract in a timely manner to return the borrowing funds and interest ability,will force the guarantee company had to compensate for it,so that the guarantee company suffered losses.This is the guarantee company is the most direct and the guarantee company the greatest impact on the form of risk,determined by the borrower's ability to repay.Thespecificity of the guarantee company to provide the loan guarantee service to the customer determines the risk of the guarantee company is different from the general enterprise.The risk of the loan guarantee business of the GH guarantee company in this paper refers to the uncertain influence that the company brings to the guarantee company due to the occurrence or change of the various factors in the process of providing the loan guarantee service to the customer.In this paper,we have studied the methods of risk management in guarantee business of guarantee corporations and did our best to improve the ability and mechanism of risk management in guarantee business and provide some references.Taking into consideration of current situation of guarantee in China,this paper incorporates theoretical analysis and practical application and makes statements for the key points of internal and external risks the guarantee corporations are facing and also the key points of risk control.In the paper,I learn and take advantages of advanced theories and methods of risk managements of guarantee business,and improve the methods of risk control in the operations of guarantee business with the practical analysis of examples for guarantee business.Based on the methods of risk control of nancing guarantee stated in this paper,people can identify and evaluate the level of risk for the nancing guarantee programs and take some actions to prevent the risks,which owns signicant reference values for the safety regulations of nancing guarantee business.The paper is divided into six chapters.In Chapter one,I will introduce the background and signicance of the topic and the related studies of guarantee business in China and other countries.In the end of Chapter one,I will introduce the contents,ideas,structure,innovations and evaluation of the paper,and related theory about the risks.In Chapter two,I will introduce the related theories of risk management for the guarantee business in guarantee companies and analyze the internal and external risks the guarantee companies are facing with the characteristics and reasons.In Chapter three,I take the example of GH guarantee company with analysis and applications of practical guarantee business to achieve the goal that incorporates the theory and practical applications with the introductions of the basic information and business procedures of the company.In Chapter four,based on the business procedures of the company,I will analyze the problems of risk managements.In Chapter ve,I will analyze the reasons why there are problems of the risk managements in this company.In Chapter six,I will make conclusions and provide some special actions and suggestions based on theproblems to improve the risk managements for the business of the company.The innovation of the paper is that I do not focus on the study of the policy guarantee company which are established by the government and the experience from western developed countries and analysis of risk managements from external circumstances.Author of the paper incorporates examples and theories with conclusions of experience,and provides some particular methods for risk managements especially for the practical procedures the guarantee business offered to the SMCs by guarantee companies.At the same time,the author analyze the practical examples,where I have achieved the goal that incorporates the theory and practical methods.