Prevention Of Risk In The Trust Industry In China

Finance as the key fact in economy, and trust is one branch of finance, so trust is also be an important fact not only affect the development of the finance but also economy. With the development of Chinese financial market and the needs of trust system, especially the new picture of mixed operation of financial institutions. The development of trust industry in china is also face a new challenge. How could trust industry developing good and steady? It is not only affects the financial institutions, but also is a difficult question for government.Credit is the foundation for the trust industry. Trust company must according to the role of'financing the asset for the clients'. So the special operation of trust companies is decided by this fact. The key of trust companies is keeping the risk during operation. But most trust companies could not keep the risk enough in China, because they have not a suitable corporate governance system.After the series risk events occurrence in the industry of trust in China, we find the main fact is the corporate governance system is not suitable for trust companies. Most trust companies have not a balanceable mechanism of rights. So the company could be controlled by some people inside, the trust companies operating some high risk for these people'subjectively mind. This kind of risk operation could be avoided by build a suitable corporate governance system. But it just because the unsuitable corporate governance system exist in most trust companies in China, all the loss of risk event are paid by the government of China. Also, it has to add the government cost for China.So this paper is based on the corporate governance theory and the development of trust industry in China. After the analysis of the risk in trust companies in china, the paper is focused on the corporate governance structure of trust companies. Compared with the abroad mature corporate governance structure, this paper aims to find out a suitable corporate governance structure for trust companies in China. The feature of this paper is use the corporate governance theory to analysis the risk of trust industry in China. Through the researching of share structure and the inside right mechanism, the paper conclude that trust company must build a bidirectional corporate governance system. Not only focus on inside governance but also focus on outside governance fact. Through the improvement the system of risk keeping, the trust companies could be keeping the risk from headstream.The difficult of this paper are below: 1. lots of information must be as supplement, because the lack of basic theory about the trust. 2. During the compare with abroad corporate governance, it is not easy to build a suitable corporate governance structure for trust company in China. 3. The data is difficult to find out, because of the opaque financial reports of trust companies in China. But after the hard research, all the difficult are conquered.This paper is composed by 6 chapters. The fist chapter introduces the aim, background. The chapter 2 introduces the summary of corporate governance structure theory. This chapter is also the basic of paper. Chapter 3 introduces the concept of trust, and through the basic concept the next chapter will be extended. Chapter 4 introduces the development of the trust industry in China. This chapter is the data basic of whole paper, it include trust industry, risk analysis, and the most important part—the analyst of corporate governance structure of trust companies in China. Chapter5 introduce the experience of corporate governance abroad countries. Chapter 6 is the main chapter of this paper, this chapter introduce both inside and outside of corporate governance. The conclusion is the trust companies should build up a suitable governance structure in China.