China's Commercial Banks Non-performing Asset Securitization Innovative Research

Assets-backed securitization, as one kind of low cost financing method, also receives high attention from various governments who are also puzzled with the bad Bank asset. The fundamental research and the practice have both proven, through this securitization method in handling bad asset, not only may speed up the bad asset handling progress, enhance the asset handling benefit, but also can promote the financial innovation, rich financial product, and speed up the capital market to the further development.In order to solve the state-owned commercial bank's bad asset problem, started from 1999, our government established four asset companies (Xinda, the East, the Great Wall, Huarong) one after another to separately receive four great national bank's bad asset up to approximately 140 billion Yuan by transferring debts to shares, packing, auction and so on to recycle the cash.Combining with the recent situation of the state-owned commercial bank's bad asset, this paper analyses the importance and methods in handling bad asset, generally introduces the history of handling bad bank asset, and gives suggestions using KMV model. Finally, sub-prime lending crisis in America provides much caution to us.