Analysis Of Commercial Bank Credit Asset Securitization

In a recently released research report of Goldman Sachs, a renowned American investment bank, it is said that China's weak banking industry will become the most serious threat to the stability and sustained growth of the country's macro-economy. The present liquidity problem largely lies in the remarkable existence of non-performing loans and the foreseeable risks of the new loans. The solution to this problem will be the introduction of new technology and the change in the operating mechanism of banks.Having drawn the attention of domestic theoretical and practical circles, the securitization of business of western commercial banks is one of the most important financial innovations over a decade. Asset securitization refers to the financing process provided and arranged by financial intermediaries, which means that assets of financial institutions will be assorted and sold to Special Purpose Vehicles with the only objective of securitization, then sold again to the investors in the market in the form of guaranteed securities with credit enhancement. Asset securitization as a technology of strong vitality, links the bank operation with capital market. From the perspective of solving problem, it can help banks of our country turn non-performing loans into cash flow as well as introducing a jointly-operated mechanism of supervision of bank operation by external investors, strengthened credit regulation and reduced risks of new loans.From the aspects of the major problems of the banking industry of our country and their solutions, evolvement and theoretical foundation of securitization as well as the securitization project of the non-performing and mortgage loans and its policy arrangements, this thesis tries to expatiate this business item that can be utilized by the banks of our country and seek ways to help the commercial banks out of the difficulty they are facing. This article is characterized by the merger of asset securitization theory into the in-depth analysis of credit asset securitization of the commercial banks in China. It consists of three parts.In the foreword, the author advances that setting up a healthy banking system is the root of stability and sustained growth of macro-economy. However, the banking system of our country is confronted with the liquidity crisis brought about by the huge amount of non-performing loans and newly-generated loans and the banking circle is in need of new means to solve this problem. The author holds that asset securitization is a good measure and give a compact description to the definition process and theoretical system of asset securitization as well as the primary thinking and logic structure of this thesis. The first part takes the Chapter one in which are expatiated the risks of massive existing non-performing loans and newly generated loans followed by their solutions. It is started with the introduction of the rigorous situation of the non-performing loans of the commercial banks in our country. It is believed that the causes of over-weighted non-performing loans are the changes of external environment and policies, government interference, poor corporate efficiency, soft restriction to enterprises by investment and financing systems, outmoded credit management of banks and sound legal system. This impairs the healthy operation of banks and gives rise to the liquidity problem so as to threaten the stability of financial system. Next, the article articulates that mortgage loans will take the most important part of the newly generated credit of the commercial banks of our country, as the real estate industry has become one of the pillars of our national economy. The foreseeable risk from real estates goes to the sluggish liquidity of newly generated credit asset caused by the mis-matching of short-term capital resources and the medium-and-long term use of capital. The author points out that the key to disposing of non-performing credit assets is whether the banks' right of credit can be repaid and asset securitization provides a good solut...