Chinese Commercial Banks Mortgage-backed Securities Research

On Dec.15^th, 2005, People's Bank of China approved China Construction Bank as thepilot of securitization of house mortgage loans to issue asset-backed securities (ABS)in inter-bank bond market. After 10-year brewing, securitization products which havebeen popular in foreign countries for about thirty years finally broke through all kindsof restrictions in legal, regulation, taxation and accounting policies of China, andformally appeared in China. In 2005, China's macro regulatory authorities made greateffort in successfully promoting the pilot of China Construction Bank, a series ofregulatory documents have broken the ice, and fundamental legal framework hasbasically formed. However from the result, the environment of the birth of JianyuanMBS is not so perfect, macro and micro economic returns are mediocre, marketreaction is not warm, the meaning of pilot is more important than the substantialmeaning, we can say Jianyuan MBS is an ecbolic premature. By revealing the case of"Jianyuan MBS" and comparing it with MBS module in western countries whereMBS is relatively developed such as USA, this Article analyzes and summarizes thedifference in direct leading role of Chinese and foreign government, and differenceamong all kinds of fundamental environment of MBS related to government's leadingrole, tries to prove the main reason resulting in current status of MBS in China lies inrelative insufficient of government's direct participation and indirect promotion, andbrings out strategy suggestions of MBS development in China based on currentsituation, macro and micro economy environment of China, i.e. Chinese governmentshould play an leading role in MBS, trying to cultivate and perfect relevant regulationenvironment and market environment to promote MBS' s swift and healthydevelopment in China.The First Part mainly elaborates theory background and development status of MBS.It introduces concept and background of MBS, briefly explains three kinds of MBSproducts, and also briefly introduces the development and current status of MBS inUSA.The Second Part mainly analyzes the active meaning for China's commercial banks toconduct MBS at current stage, including two parts--macro active meaning and activemeaning to commercial banks themselves.The Third Part is a keystone of this Article, analyzing main differences betweendomestic and overseas MBS operating module, especially between China and USA,coming to the conclusion that main problems existing in current status of MBS inChina lie in the insufficient leading function of government, which indirectly resultsin weak fundamental condition. And the comparing analyst mainly focus on eightaspects, the first is direct leading role of government, and the second aspect is indirectinfluence of functions of government, such as choice in SPV,Motives in MBS,development status of MBS,perfection degree of legal regulation environment,prevention measures of credit risk,maturity degree of intermediate service system andrange of investors.Based on the comparison in the Third Part, we can come to the conclusion that, thedevelopment strategy of MBS in China should insist in the leading role of government,and to continually perfect all fundamental environment including legal regulations, topromote the healthy and steady development of MBS. Taking into account of ourcountry's actual situation, the Article brings out a series of specific suggestions for thedevelopment strategy of MBS in China, mainly include two aspects: establishing andperfecting the supporting system of government, and continually perfecting thefundamental conditions of MBS.