H Financial Leasing Corporation Credit Risk Management Analyze

Financial leasing,also known as equipment leasing or modern leasing,is a type of financial transactions that integrates traditional leasing,trading and financing methods in order to achieve the result of financing through the means of leasing-assets.This type of transactions involves three major stakeholders,the seller,the buyer and the user.Entering the 21st century,financial leasing companies in China can be categorized into three factions-those belongs to the banks,those belongs to the manufacturers,and those independent third-party financial leasing companies.Restricted by their limited financing capacity and other factors,independent third-party financial leasing companies in China usually engage businesses with relatively high return but also high risk.Among many risks involved in their actual operations,credit risk is one of them.Taking Company H as the research subject,a targeted analysis about the credit risk involved in its financial leasing operations is conducted and explained in this paper.Through the study of Company H’s financial leasing credit risk,this research comes to the following conclusions.First of all,Company H demonstrates a relatively good overall operational status in recent years,specifically in terms of its corporate solvency,operational status,profitability and developmental potential.Secondly,through applying credit risk evaluation matrix and conducting expert investigation,primary risk factors in managing client companies are identified and ranked as incomplete preliminary investigation,less comprehensive credit risk identification,elevated area concentration,ineffective risk classification,early-warning and customer positioning management.Thirdly,existing problems associated with Company H’s financial leasing credit risk mainly involves:1)elevated industry concentration;2)less comprehensive credit risk identification system;3)less adaptive credit risk management within the ever changing external economic environment;4)ineffective post-leasing early-warning mechanism;5)preliminary investigation with less depth and discipline;6)lack of effective asset risk classification management.Finally,this paper puts forward several suggestions and countermeasures to the problems identified,which include 1)expanding clients into new industries in order to diversify risks and elevating company’s adaptability into external changes;2)establishing credit identification system;3)forming risk early-warning mechanism;4)conducting preliminary investigations with discipline;5)implementing effective asset risk classification management;6)improving the quality of company information systems and communication channels...