On The Relative Advantages Of Asset Securitization And The Applying And Development In China

Asset securitization is a financing tool, enterprises use it to raise money by securitizing certain assets which could generate future cash flows separated from the whole enterprise. Asset securitization originated in the United States, but it has been developed greatly both in extent and depth in a worldwide range and has been one of the main financing tools of enterprises in a short period of 30 years.Its is the relative advantages of asset Securitization compared with equity financing and debt financing which made asset securitization be an brand-new financing tools of the enterprises'. Theoretically, there are combinations of asset portfolio, the bankruptcy isolation and credit enhancement of different degree in all the three mainkind type enterprises'financing tools: equity financing, debt financing and asset securitization financing, but a higher degree of bankruptcy isolation in asset securitization financing makes a disparate spectrum of asset portfolio and quite different credit enhancement effect. This new method of asset securitization financing be able to reduce the qualification for the enterprises access to the capital market, enable enterprises access to a low-cost financing tools, can maintain the flexibility of financial management and avoid the losses from disclosure too much business information of enterprises to the public, even more, enterprises can optimize the financial statements in the off-balance sheet model of asset securitization. These are the relative advantages enterprises could not achieve at the same time in the traditional equity and debt financing, and these relative advantages also make more enterprises have launched dynamic to asset securitizing asset and a more wider range of enterprises have the ability to launch asset securitization financing.Although Chinese enterprises has entered into the multiplex financing stage, actually most of them are in the plight of single financing tools to choose, and the main reason leading to this plight is that the conditions of enterprises'own bad financial statements limited them access to the traditional financing tools. The relative advantages of asset securitization financing could help enterprises come out of the financing plight, therefore, it is necessary to apply and develop asset securitization financing in Chinese enterprises and there are great driving force for applying asset securitization and we could also predict its bright prospects.China has been launched several asset securitization experimental practices guided by the government, these experimental practices both learn from foreign experiences also innovated and developed under the asset securitization financing's principles. Since there are some inherent limits in the basic securitizing assets and some problems in Chinese enterprises'asset need to be solved, and the corresponding environment which the relative advantages of asset securitization rely on has not been set up or perfect yet, the asset securitization could not applying in Chinese enterprises in a large scale and reach to a fulfill development. Some solutions and recommendations are presented in this paper in the hope of promoting the applying and develop of asset securitization financing in Chinese enterprises.