Research Into How To Control And Defuse Loan Risks In Chinese Colleges And Universities

Modern colleges and universities originated during the Middle Ages. Only after getting rid of a mere appendage of the church did early western universities slowly become academic institutions, where scholars were self-governed, and they quietly imparted knowledge and engaged in acdemic activities. The visage functions of modern colleges and universities have changed a lot, along with the economic growth, the science and technology revolution, the knowledge explosion, and the political and democratic development, since the 20th century. Then, they have been transformed from "ivory towers" into mankind's knowledge factories and think tank, the "incubator" for science and technology, and the "boost motor" for social progress, without a doubt; as a result, they have become the axis from the peripheral organizations. Redoubling efforts into higher education has reached a consensus among the vast majority of countries. Popularizing higher education amongst the common people has been irresistible since World WarⅡ, and this took place first in developed countries, then closely followed by developing countries.Inevitably,1999 was considered as a turning point in the history of higher education; on June 24th, the Ministry of Education and the State Development Planning Commission called the news conference together, announcing that the number of college students would be enlarged in that year. Since that, the steady and appropriate situation of higher education has been changed, higher education driven into the fast traffic lane, which meant blowing the clarion for popularizing higher education. According to statistics, the number of college students went up from 1.0836 million to 6.0766 million; and at the same time, the gross enrollment rate of higher education rose from 9.8% to 23.3%, which enlarged the number of students who received higher education and contributed enormously to becoming a strong higher education nation. In addition, however, colleges and universities have been burdened with as much as 450-500 billion yuan, which brought many of them on the verge of insolvency.Nowadays, how to control and diffuse loan risks in Chinese colleges and universities is a hot topic about which the theory circle is concerned. Regarding that,this thesis is comprised of the following parts. Accurately, the first part is mainly concerning the prolegomenon of the thesis; part 2 is the main body, Chapters 1-5 included; the last part is the conclusion of the thesis. The prolegomenon part sets forth the research background, research topic and research meaning, summarizing the research concerning loan risks in colleges and universities at home and abroad, which lays the foundation of the thesis.Chapter One is about the causes of loan risks in colleges and universities. Through the research, it is found that there are four reasons for them:first, the underlying reason is the macroeconomic policy; second, the direct cause is college expansion; the third is the disproportion between the national financial investment and college expansion, and the last is the linkage between the government, banks and colleges.Chapter Two is the analysis of the status quo of loan risks. Through the research, there are three existing conditions:the first is that the loans in Chinese colleges are massively unsecured; second, there exist a long-standing mistaken idea about use of those loan funds, and lastly, there is bad mismanagement of loan funds; that is, it is typical of loose government management, colleges'free fund management, and sloppy bank management.Chapter Three is study of the international comparison of the funds collected by colleges. Though there are big differences in political systems, history, culture, economic development models and social customs between the developed countries of the west and China, yet the wholesome part of their higher education models and the valuable experience of higher education fund raising do contribute actively to the healthy development of our nation's higher education. In the comparative analysis of higher education fund raising of three countries, namely, the USA, South Korea, and Japan, sound strategies with referentail use are provided for our country's higher education fund raising:first, the national financial funded proportion needs an increase and the fund raising models for higher education need diversifying; second, the higher education endowment system suitable for China needs setting up; the last is enhancing the legal construction of education to make higher education fund raising legally protected.Chapter Four is research on how to control loan risks in colleges and universities. The loan of several hundred billion yuan is not what colleges wish for but what the result of the linkage between colleges, banks and the government is. Accurately, because of many years'severe lack of education funds and non-stop college expansion. Even though colleges are burdened with debts, the projects funded by previous loans are not yet completed. They are still pinning all their hopes on the banks continuing to grant them loans for completion of those projects. In order to ensure the healthy development of higher education and their financial security, something must be done to prevent the loan risks from increasing. What the thesis would suggest is close co-operation between the government, colleges and banks. In the case of the government, the legal person economic responsibility must be strengthened, supervision of use of college loan funds be intensified, the college loan risk early-warning system and large loan record system be set up. As for colleges and universities, the internal audit system must be established and perfected on the premise that the mistaken thought of loans should be rectified; at the same time, the college loan risk testing mode must be used for self-inspection risk in order for risk to be prevented from increasing. As far as commercial banks are concerned, evaluation of college credit extension should be strengthened, the after-loan tracking management be energized on the basis of the internal control mechanism.Chapter Five centers on how to diffuse college loan risks. The conflict between colleges'increasing financial demands and limited educational resources is increasingly serious, which brings about college loan risks. The thesis suggests that colleges and universities are the key to solving this problem,and the government and commercial banks give aid. In the case of colleges and universities, first, their own'hematopoietic function'must be strengthened——diffusing massive loans by establishing entrepreneurial universities. With the drastic development of information technology and knowledge economy, colleges'external environments have been changing rapidly and profoundly since the middle and late 20th century. Some entrepreneurship universities of Europe and America first went out of ivory towers; then, they utilized their own knowledge innovation fruits, attracted investment, opened hi-tech companies, quickened original scientific and technological achievement transformation, incubated, expedited and created new industries, and undertook heavy responsibilities for economic development and improving national competitiveness, which generates a new university model with entrepreneurial activities. Nowadays, entrepreneurial universities are slowly rising. Though transient, the new model of entrepreneurial universities has so far made great achievements in Europe and America. Given this, Chinese colleges and universities should change their former organization method, make every effort to change into entrepreneurial universities,and strengthen their own hematopoietic function to diffuse loan risks. Secondly, resource use efficiency should be improved, and economical universities set up. Thirdly, the higher educational endowment system should be built and the endowment absorption ratios increased.Fourthly, employing project financing helps diffuse part of the loans; finally, land replacement can be used to pay back part of the loans.The government should accept part of the responsibility for diffusing the loans in that it provides colleges and universities with inadequate supervision and a smaller proportion of financial budgets. For this reason, the national financial education investment should be increased in order that the plan put forward in 1993 that the national financial education investment would make up 4% would be realized as soons as possible. Secondly, the government ought to actively support multi-channel running school to raise more funds. Thirdly, the government is expected to quicken the system reform to attract more investment. Last but not least, the government should start policy banks to replace part of the loans given by commercial banks. Where commercial banks are concerned, they are supposed to draw the reserve for bad and doubtful debts to write off part of the loans in Chinses colleges; on the other hand, they can diffuse loan risks by means of syndicated debt restructuring.Part 3 is on the subject of conclusions, which summarize the strategies for controlling and diffusing loan risks in Chinese colleges and universities,which I hope will help the sustained, rapid and sound development of our nation's higher education and make tremendous contributions to the harmonious development of the economic society.