Causes and Solutions of Npl in China

Jun. 2007, Volume 6, No.6 (Serial No.48) Chinese Business Review, ISSN1537-1506, USA Causes and solutions of non-performing loan in Chinese commercial banks GUO Ning-ning (Jiangsu Branch, Bank of China, Nanjing 210005, China) Abstract: Non-Performing Loan (NPL) is one of the cover embodiments of credit risk which banks take. NPL is a huge puzzle for Chinese commercial banks, so how to enhance risk management to change assets quality and lower down NPL are of great grandness to those banks. Key words: NPL; Chinese commercial banks; causes; solutions 1. Analysis on causes of NPL in commercial banks There is so-called 4-3-3 distribution for the causes of governance of corporate customers NPL from actual practice, i.e. non-standardized outside considerateness factors account for 40%, enterprises undeveloped inside surgical process management factors account for 30%, and banks extensive inside operation management factors, which are the fury of analysis in this paper, account for 30%. 1.

1 Non-standardized outside circumstance is the primary factor of formation of NPL During the shift from planned sparing to market economy, Chinese banks are affected badly by outside circumstance, for example, national policies, behavior of local governments and social credit environment, and they commit great cost for social development, economic chemical mechanism reform and economic structure adjustment. A great bring off of enterprises take the advantage of the shift to escape or extirpate the bank debts, especially at the end of 1990s, through bankrupting, revolve off, merging and other various methods. 1.2 Enterprises undeveloped inside operation management is the main factor of formation of NPL Ever since a long time ago, many Chinese enterprises have been roiled by inflexible operation mechanism and management confusion. many enterprises lack accurate judgment for the trend of market and extend production scale in hot industries without any consideration, which allow to serious... If you want to get a full essay, order it on our website: Ordercustompaper.com

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