The Potential Risks On Z Bank Caused By Private Lending And Measures It Has Taken To Deal With Them

Private lending as a traditional financing measure, occurred among personal, corporation and social economic organization, with satisfaction of the need of financing for individuals, and commercial holders. Private lending is increasingly accepted by individuals and commercial holders based on its characteristic including big number, low threshold, flexible term, large amount and convenient structure. Not only the number of borrowing people is increasing, but also the lending in the structure is expanding. In the expansion of private lending at the same time, we should be awake to realize that private lending is a “double edged sword’. On one hand, private lending effectively fulfill the need of the financing market due to its characteristics such as simple procedure, fast measure, flexible term, diversified guarantee methods. On the other hand, it also has its weakness, because private lending market is not reasonable managed and not regulated effectively by related government division. Along with the fast development process of the financing market, it caused a lot of problems, for example, money-laundering, illegal fund raising, loan sharks. Even more, the risks is gradually penetrate into commercial banking system.So, we take Z bank as an example, to make a research about the risks caused by private lending, and to figure out some methods keep Z bank away from these risks. First of all, it is very important for Z bank to prevent itself from private lending; second, the prevention can reduce the private lending risk on overall financing environment; in addition, the prevention can strengthen the recognition of the risks and also can make related standard management rules.This paper is divided into five parts. Part one: an introduction, is a general overview of the paper. First of all, it illustrates the analysis the background and significance of the topic; second, introduces the research contents and methods. Part two: related theory research, reviews the private lending, including the definition of private lending, the reason of its existence and development. Part three: the Z bank’s potential risk type caused by private lending and case analysis, from the external macro environment and internal management risk, internal management risk include: credit risk, liquidity risk, market risk, operation risk, legal risk, and reputation risk. Part four: Z bank analyzes the rules against the potential risk caused by private lending. First of all, Different risk response should be taken according to different types of risks; second, patterns of cooperation between commercial bank and private lending. Part five: conclusion and summarizing, and the points out the innovation and weakness of the paper.