A Case Study Of NPA Disposal Experience During The Economic Downturn

The disposal of non-performing assets(NPA)is an important part of the financial risk management system and plays an important role in resolving the financial crisis and promoting economic development.In recent years,China’s economic growth rate and growth energy has continued to decline,indicating that China has entered a new round of economic downturn.At the same time,the national financial risk indicators such as the scale of NPA and non-performing loans(NPL)continued to rise,affecting the long-term stability of the economy and society.Unlike the disposal of NPA around the year 2000,the nature,distribution,and disposal methods of NPA have changed dramatically in the asset-trading market.It’s necessary to conduct in-depth research on the disposal of NPA during the current economic downturn,summarize relevant experience in the disposal of NPA,and provide theoretical and practical recommendations.Based on the theoretical analysis of related literatures at home and abroad,the paper constructs a macro-analysis framework for the disposal of NPA during economic downturns.Summarizing the economic and financial statistics of Zhejiang Province from 2008 to 2016,it was found that during the economic downturn in Zhejiang province,the balance and rate of NPL in Zhejiang was large,and there’re many zombie enterprises.However,corporate leverage and private lending rates fell,and the proportion of direct financing increased.Industrial economic adjustments improved asset quality,which contributed to the disposal of NPA.During the economic downturn,there are still problems in disposing of NPA.It is difficult to solve the risk of ’two-chain’.The disposal capacity of financial institutions in the market for disposal of NPA is relatively weak.There are still certain loopholes in the government supervision.The paper proposes a "Zhejiang Model" for NPA disposal(GFRI model)based on Zhejiang Province and its cities’ experiences.This means "government promotes the integration of financial factor resources and revitalizes the inventory of NPA",including setting up a financial asset trading platform and creating local financial services.Institutions and the establishment of local financial supervision systems and other specific measures have enabled the revitalization of stocks of NPA.Through the case,we found that the GFRI model has advantages.One is to prevent and resolve financial risks from the source,and to control the scale of NPA at a lower cost.the second is to give full play to the role of market allocation of resources,improve the efficiency of disposal of NPA,and accelerate the reduction.There’re some conditions for the GFRI model application.Firstly,it has an open market economy environment,provides quality financial resources,and meets the need for disposal of NPA.Secondly,it has more flexible policy support,reduces the cost of financial innovation,and encourages financial institutions to participate.Thirdly,there are obvious industrial characteristics,which are conducive to finding the key issues in the disposal of NPA.