The Practical Significance Of The State Development Bank Securitization Of Credit Assets And Ways To Achieve

Asset-backed securitization (ABS) has been the most important financial innovation since the 1970s'. It has fundamentally changed the financial industry and redefined the asset/liability management concept of the traditional banking sector. In a way, it has given the bank new definition, or redefined the bank.In the 1990s', China started to explore the ABS business. Some successful cases emerged while many obstacles still exist. At present, we are still exploring this new financial instrument in China. Against this big backdrop, China Development Bank (CDB) put forward the idea of loan-backed securitization. CDB, the largest policy bank in China, mainly provides credit support to infrastructure projects, basic industry and mainstay industry. CDB raises funds mainly by issuing financial bonds in the inter-bank market. The characteristics of business and existing problems give CDB internal momentum and realistic significance to conduct ABS business. Through loan-backed securitization, CDB can better match its assets and liability, dilute the risks of borrowing long and lending short, broaden the funding sources, lower financing costs and effectively increase its capital adequacy ratio. In this way, CDB can meet the developing trend of international financial industry and lay the solid foundation for competitions against the foreign counterparts after China's WTO entry.To carry out ABS business, CDB has to face many obstacles regarding law, accounting and taxation. In the mean time, CDB must also bear the risks arising from under-developed domestic capital market and ABS itself. In the dissertation, I designed the off-shore ABS model for CDB. After analyzing the characteristics and competitive edge of off-shore ABS, I carried out the feasibility study on CDB's doing ABS off-shore. And I also articulated the risks of ABS and risk dilution methods and came up with concrete implementation strategy.