Research On Credit Incentive-constraint Mechanism Of State-owned Banks

Credit business is the principle business in commercial banks, and the risk coming with it is mayor risk of banking. Credit assets with high quality is a basis of banking's moderate management and social steady development. Under the situation of entry to WTO and financial globalization, State-owned Commercial Banks (SCB) face opportunity as well as challenge which we have never met before.Firstly, it is commonly known that, affected by the credit policy, the credit assets quality in SCB is so poor for having no enough restriction to the borrowers and the bad ratio so high. Secondly, foreign banks and rising joint-stock banks win over excellent financial elitist clients by their effective incentive mechanism. Thirdly, with the gradual opening of China's financial market, the more and more furious competition puts a threat on SCB. The behindhand incentive-restrictive mechanism has been a barrier to SCB's further reform and development. Under such severe situation, it is more significant for SCB to set up a rational effective credit incentive-constraint mechanism.This thesis firstly summarizes the theories of incentive-constraint mechanism. Then it expounds the main characters in China's credit market and analyzes credit incentive-constraint mechanism actuality of SCB concretely. It also introduces its disadvantages and the main credit risks under asymmetric information. Those are the moral hazard from internal personnels and converse selection and moral hazard from the borrowers.Using some knowledge of game theory and information economics, this thesis carries out incentive mechanisms on skeleton personnels through incentive contracts, duteous incentive contracts, and so on. Reputation mechanism and stock-option incentive mechanism are effective to entrepreneurs. Signal transfer and screening can be ways to avoid adverse selection. Negative incentive condition and supervision model are designed for preventing borrowers' moral hazard.After enough research, this thesis puts forward some policy advice for perfecting credit incentive- constraint mechanism in SCB. Those include reforming property right, building law environment, developing credit system, perfecting financial market and saapproching monitoring system.