Research On Risk Management Of Asian Infrastructure Investment Bank

With sixty percent of the world population and one third of the global economy, Asia has been the most vigorous and potential region. While for the shortage of construction funds, some nations are gravely short of infrastructure, such as railways, highways, bridges, ports, airports and communication facilities, being the obstacle of regional development. According to the analysis of Asian Development Bank, from 2010 to 2020, the demand of Asian infrastructure investment is about 8 trillion dollars, which is beyond the supply of the World Bank and Asian Development Bank and other international multilateral financial institutions. Meanwhile, the infrastructure investment is a exceptional and through the analysis of the theory of Information Asymmetry,.Public Goods, Externality, Monopoly, Rostow Take-off and Financial Restraint and Allocation, it is found that and the merely market-oriented allocation of financial resources can hardly close the funding gap of Asian infrastructure investment. At the moment, the Chinese government launch the Asian Infrastructure Investment Bank (hereinafter referred to as "AIIB"), which serves for Regional infrastructure and connectivity and is conducive to the long-term development and mutual prosperity of Asian countries.Though China has experienced a thirty-year Reform and Opening and harvested a rapid growth in social and economic field, it is still inexperienced in managing multilateral financial institutions. Unlike the developed country, it is the first time for China to organize such an institution. Adhering to the principle of commercialization, AIIB attempts to surmount the weakness of traditional international multilateral financial institutions, such as inefficient and high-cost decision-making, overstaffed organization and the deficient loan for backward countries, which requires superb wisdom of management. Nowadays, the inherently fragile and unstable financial system can result in the accumulation of risks and when the risks accumulate to a high level, the financial system will lose its function to allocate the financial resources. Consequently, being in the complicated financial system, AⅡB naturally has the parallel risks with the commercial banks, specifically including credit risk, market risk, liquidity risk and operational risk. Besides, AUB is also a multilateral financial among regional governments. As an international institution initiated by China, AⅡB is inevitably influenced by the competition between China and other countries in politic, diplomacy, military and national interests, bringing it a series of unique risks such as national risks, political risks, reputation risks, competition risks and legal risks.Through the analysis of the management risks faced by the AⅡB, this thesis, based on the AⅡB’s own risk-solving project, makes an attempt to offer a classified risk management suggestion respectively for the general and special risks. Especially, for the special risks, Chinese government ought to initiatively involve in the AⅡB’s management to dispose political and diplomatic relations preferably and further reduce the possible operational risks in the presence of AIIB.