Innovation Of Small And Medium-sized Bank Bill Business

The innovation of the bill business plays a vital role in the development of the bill market.It is widely acknowledged that because of the imperfect construction of the credit system in Chinese bill market,the amount of commercial acceptance bills issued in the Chinese market is extremely low.Only large supply chain companies and state-owned enterprises can issue commercial acceptance bills which are able to circulate in the bill market.Furthermore,the innovative entities of the bill business also rely mainly on financial institutions,since a large number of the bills are still only accepted by banks.Although financial institutions,especially major commercial banks,do their utmost to innovate new bill productions,such as confirming warehouses,tickets changing businesses and package buying instruments,few of them enjoy high market acceptance,good market efficiency and high market influence.As a representative of small and medium-sized banks’ bill business,China ZheShang Bank’s bill pool product ——“YongJin Bill Pool”,has collected 60 billion RMB in the first year since its establishment in 2014.By October 2018,its customers have raised to 20,000 and the balance of financing exceeds 280 billion RMB.Its growth rate is amazing and its market influence is self-evident.Thus,how could “ZheShang Bank YongJin Bill Pool” achieve such success?In December 2016,Shanghai Commercial Paper Exchange Corporation was established,which is a milestone event in the bill market.The establishment has brought far-reaching influence on the development of the bill market,creating a new operation mode of the commercial bank bill business.The second part of this paper reviews the development and the characteristics of the bill market and discusses the necessity of the commercial banks for developing the “bill pool business”.The third part of this paper analyzes a typical case of ZheShang Bank-the " YongJin bill pool".Based on the inclusiveness of the "Yongjin Bill Pool",this paper expounds the risks,characteristics and functions of the "Yongjin Bill Pool" through the big data.Currently,the “Yongjin Bill Pool " has developed to version 3.0.The operation mode of " electronic bill + financing " is based on the background of large coverage of electronic bills,centralization of transactions and diversification of participants.The “Yongjin Bill Pool 3.0" has many special functions,such as ultra-short loan,group quota sharing,dynamic pledge of bills,supporting the entry of commercial bills into the pool and so on.In the past five years since 2014,the market rules behind the bill pool mainly include the following six aspects: First,the bill pool focuses on the business of bills with small denomination.Second,the revitalization of vulnerable bills by the bill pool deserves consideration.Third,the willingness of the drawer needs to be considered.Fourth,there are large space of bill market.Fifth,banks should excavate the time value of bills.Sixth,banks should consider the environmental value of the bill market.Zheshang Bank’s Yongjin bill pool also reflects several problems in the bill market: arbitrage bills,bill market rating,financing bills,and the risk of new bills.Despite the fact that the construction of the bill market is still not perfect,the main function of the bill which is serving the real economy especially financing small enterprises remains unchanged.To test whether bill financing serves the real economy,we do an empirical study and use hysteresis to test the endogeneity.The explanatory variables are actual amount of bankers’ acceptance,balance of bankers’ acceptance,actual amount of discounted bills and balance of discounted bills.Total retail sales of consumer goods and total investment in fixed assets are regarded as explanatory variables.Small and medium-sized banks who have not carried out or have few experiences in bill pool business can draw inspiration from the development of Yongjin Bill Pool to some extent.The fourth part of this paper firstly analyzes the development of the bill pool business under the changes of the macro environment.Secondly,it discusses the development direction of the bill pool business for the small and medium banks.That is to say,the bill pool business will be transformed from simplification to integration,from management to value-added,from systemization to experience design.Moreover,the risk management of its bill business will be enhanced.For small and medium-sized banks,they have a strong incentive to carry out bills pool business.Under the impact of strict financial supervision,market-oriented interest rates and financial disintermediation,the pressure of small and medium-sized banks is increasing.It is urgent to improve their own asset management capability,enhance customer stickiness and expand intermediary business income.Besides,small and medium-sized banks are constrained by financial technology,information systems,risk management and low credit level.Small and medium-sized banks need to strengthen hardware facilities,at the same time,form a small and medium-sized bank alliance system,enhance mutual credit lines,which will help the development of the bill pool business.In a word,with the operational transformation of commercial banks,the innovation of bill business is developing continuously.Taking ZheShang Bank’s "YongJin billing pool" business as an innovative representative of the bank’s intermediary business,this paper elaborates the the case from the aspects of development motivation,business performance as well as risk prevention and control,in the hope of providing some reference for small and medium-sized banks in China to carry out billing pool business.