Study On Evaluation Of The Non-Perming Loans

Since1999, my Government established four policy asset management companies, through the massive split and government efforts on financial control of non-performing loans, non-performing assets ratio has decreased, but the increment of bad loans still failed to control.But in the practice of evaluation in China, there is no uniform financial bad loan assessment criteria and technical specifications, evaluate quality depends on the tprofessional level of personnel, and because China’s market economic system, most of the evaluator can not be accurately grasping the financial markets,and machineryly use Evaluation Method, leading to assessed value is different from the actual disposition value. In addition, there is value manipulation in the process of the assessment of financial bad loans, leading the actual situation out of the market. Therefore,it is urgent to improve China’s financial bad loan assessment of system. Therefore, this article start from the financial bad loans, conducted a study on analysis of the bad loans value, evaluation method and application, After on the basis of analyzing the financial assets assessment methods, combined with the application of specific examples to illustrate a variety of methods, to find the current defects in practice, and improve the operation of the evaluation methods.At the basic level, this article define the scope and characteristics of the bad loans, explore the historical causes of bad financial assets from the perspective of the Government, banks and corporates, and by analysis on the characteristics of China’s bad assets and development level of non-performing assets market, to research factors affecting the value type and value applicable to the situation of our country. Next, this article describes successful experiences of the United States and other countries in terms of dealing with the bad assets, and compared with assessment of the situation in China, In turn, obtained enlightenment on the improvement of non-performing assets valuation practice from the comparative analysis.Finally, I would focus on discussion on the method level and assets valuation techniques in China, and operate the four evaluation methods consistent with our special nature of bad assets and market condition. The four methods for the assessment are hypothetical liquidation, credit evaluation, case comparion approach and experts method. Among them, hypothetical liquidation mainly applied with company which have not the ability to continue. For although the insolvency or for other reasons cannot pay on time, but there is still potential for growth and ability to continue, and you can make several years of audited financial statements, credit evaluation rule is the most appropriate evaluation methods; And when not knowing the financial information of the debtor and have similar case, we can choose case comparion approach.Experts method is apply to the claims which incomplete or failed to get financing and credit data, needs the help of the collective judgment of the experts.Finally, based on the status of bad assets in China, this article made six suggestions on perfecting financial bad loan assets valuation. First, government should increasing the intensity of policy guidance and support;Secondly, strengthening the construction of appraisal profession; Thirdly, focusing on the collection of assessment data and perfecting basis of assessment operations.Four, increasing the weight of non-financial factors in the evaluation system; Five, establishing a unified communication platform; Six, leading parties proper use evaluation findings.This article is inadequate and limited mainly to the following aspects:Because the lack of the research about domestic bad loans, insufficient theoretical research results collected in foreign countries,so this article does not work by absorbing predecessors.When use case comparion approach,for poor channel limits of data collection,resulting in the conclusion can’t quantify analysis of all factors.In the combination of quantitative and qualitative indicators in the assessment system, Because of personal capacity constraints, cannot further study the weighting of both, but draws on work by predecessors.Banks’ bad loan assessment is a highly professional work, applicability of proposed research in practice has to be undertake empirical testing, and because of shortage of practical experience, I am very confused in writing, scientific analysis methods should be improved.This article selected some aspects of the basic theory of bad loan assessment, did not make a complete assessment framework, so the next work should be further improve the framework of bad loan assessment.