Study On Evaluation Of Trust Company's Risk Management Ability Based On Factor Analysis Method

Trust is a legal system based on credit relations.The trustor delegates his property rights to the trustee based on his trust on the trustee.The trustee will use his own name as the beneficiary's interest or specific purpose according to the will of the trustor.He will manage or discipline the property.Modern trusts are extremely flexible in their operations,integrating functions such as property management,financing and public welfare,and play an important role in the modern financial system.By the end of 2017,the total scale of trust assets in China had reached 26.25 trillion yuan,and it continued to maintain its second position in the financial industry.Maintaining such a large amount of funds will inevitably trigger a national financial crisis once systemic risks occur,and will be a devastating blow to our financial system.In this regard,the relevant regulatory agencies and industry self-regulation associations should establish a trust company evaluation system of risk management ability as soon as possible in order to detect the potential risks of the trust industry better.After analyzed the current situation of the risk management of trust companies and the current operating model of trust business,this thesis attempts to start with the evaluation of financial performance of trust companies and build a set of evaluation indicators system for risk management abilities of trust companies.Based on the financial data during 2014-2016 of 61 trust companies in the trust industry associations,we analyze the risk management abilities of trust companies based on factor analysis method.The study found that growth factor,profitability factor,risk operation ability factor and solvency factor are the main factors affecting the risk management ability of trust companies in China.In the end,we obtained the scores and rankings of the 61 trust companies.From the perspective of ranking,risk operation ability and debt repayment ability are crucial to the trust company's risk management ability.The improvement of the risk management ability of trust companies also depends on the balanced development of all factors.The prominent of unilateral factors does not help companies achieve strong risk management capabilities and market competitiveness.Only trust companies with balanced development in all aspects can achieve significant growth.Based on the above study conclusions,this thesis had given recommendations for improving the risk management abilities of trust companies in China.