IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/115.html
   My bibliography  Save this paper

China's asset management corporations

Author

Listed:
  • Guonan Ma
  • Ben S.C. Fung

    (Bank of Canada)

Abstract

To address the banking system's non-performing loan (NPL) problem, the Chinese government set up four asset management corporations (AMCs). They were to buy up bad debts of the big four state-owned commercial banks and dispose of them over 10 years, taking a large step towards NPL resolution. But in their first two years, these AMCs have made only a limited contribution to resolution of the NPL problem. They have taken over less than half of the NPLs at the big four banks. In addition, while AMC financing have been less than transparent, it appears to have burdened The People's Bank of China (PBoC) with greater risks to date than the Ministry of Finance (MoF), although there have not been to date any evident monetary consequences. Under plausible recovery scenarios, the AMC losses would surpass the current financial contributions to the AMCs from both the MoF and the PBoC. Since their cash recoveries have lagged their interest obligations, the AMCs face rising cash flow pressure. In response, the government is pushing for speedier asset recovery, as evident in the milestone of the first international NPL auction.

Suggested Citation

  • Guonan Ma & Ben S.C. Fung, 2002. "China's asset management corporations," BIS Working Papers 115, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:115
    as

    Download full text from publisher

    File URL: http://www.bis.org/publ/work115.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: http://www.bis.org/publ/work115.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. George Soros, 1999. "The International Financial Crisis," Challenge, Taylor & Francis Journals, vol. 42(2), pages 58-76, March.
    2. Stijn Claessens & Daniela Klingebiel & Luc Laeven, 2001. "Financial Restructuring in Banking and Corporate-Sector Crises What Policies to Pursue?," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 147-185, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gary Gorton & Lixin Huang, 2004. "Liquidity, Efficiency, and Bank Bailouts," American Economic Review, American Economic Association, vol. 94(3), pages 455-483, June.
    2. Vincent Bouvatier, 2010. "Hot money inflows and monetary stability in China: how the People's Bank of China took up the challenge," Applied Economics, Taylor & Francis Journals, vol. 42(12), pages 1533-1548.
    3. Piet van Gennip, 2005. "Loan Extension in China: a Rational Affair," DNB Working Papers 037, Netherlands Central Bank, Research Department.
    4. Bhabani Shankar Nayak & Jia Xu, 2018. "Historical Trends and Transitions in Credit Risk Management of Chinese Commercial Banks," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 9(5), pages 96-104, September.
    5. Vincent Bouvatier, 2006. "Hot Money Inflows in China: How the People's Bank of China Took up the Challenge," Post-Print halshs-00111153, HAL.
    6. Alicia García-Herrero & Sergio Gavilá & Daniel Santabárbara, 2006. "China's Banking Reform: An Assessment of its Evolution and Possible Impact," CESifo Economic Studies, CESifo Group, vol. 52(2), pages 304-363, June.
    7. Guonan Ma, 2007. "Who Pays China's Bank Restructuring Bill?," Asian Economic Papers, MIT Press, vol. 6(1), pages 46-71, Winter.
    8. Eric Girardin & Sandrine Lunven & Guonan Ma, 2017. "China's evolving monetary policy rule: from inflation-accommodating to anti-inflation policy," BIS Working Papers 641, Bank for International Settlements.
    9. Robert N McCauley, 2006. "Consolidating the public debt markets of Asia," BIS Papers chapters, in: Bank for International Settlements (ed.), Asian bond markets: issues and prospects, volume 30, pages 82-98, Bank for International Settlements.
    10. Daniel Poon, 2014. "China’s Development Trajectory: A Strategic Opening for Industrial Policy in the South," UNCTAD Discussion Papers 218, United Nations Conference on Trade and Development.
    11. Barbara Stallings, 2004. "Financial Liberalization, Crisis, and Rescue: Lessons for China from Latin America and East Asia?," IDB Publications (Working Papers) 48078, Inter-American Development Bank.
    12. Gordon, M. J., 2003. "Is China's financial system threatened by its policy loans debt?," Journal of Asian Economics, Elsevier, vol. 14(2), pages 181-188, April.
    13. Yu, Xin & Zheng, Ying, 2019. "The value of political ties for firms experiencing enforcement actions: Evidence from China," The British Accounting Review, Elsevier, vol. 51(1), pages 24-45.
    14. Chen, Ting-Hsuan & Chou, Hsiu-Hsia & Chang, Yuan & Fang, Hao, 2015. "The effect of excess lending on bank liquidity : Evidence from China," International Review of Economics & Finance, Elsevier, vol. 36(C), pages 54-68.
    15. John Hawkins, 2003. "Central bank balance sheets and fiscal operations," BIS Papers chapters, in: Bank for International Settlements (ed.), Fiscal issues and central banking in emerging economies, volume 20, pages 71-83, Bank for International Settlements.
    16. Lejot , Paul & Arner, Douglas & Schou-Zibell, Lotte, 2008. "Securitization in East Asia," Working Papers on Regional Economic Integration 12, Asian Development Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bolzico, Javier & Mascaro, Yira & Granata, Paola, 2007. "Practical guidelines for effective bank resolution," Policy Research Working Paper Series 4389, The World Bank.
    2. Morten Balling & Peter Egger & Ernest Gnan & Axel A. Weber & Harald W. Stieber & Stavros Vourloumis & António Afonso & João Tovar Jalles & Franco Bruni & André van Poeck & Maartje Wijffelaars & Séveri, 2013. "States, Banks, and the Financing of the Economy: Fiscal Policy and Sovereign Risk Perspectives," SUERF Studies, SUERF - The European Money and Finance Forum, number 2013/2 edited by Morten Balling & Peter Egger & Ernest Gnan, May.
    3. Beck, Thorsten & Laeven, Luc, 2006. "Resolution of failed banks by deposit insurers : cross-country evidence," Policy Research Working Paper Series 3920, The World Bank.
    4. Gimet, Celine, 2007. "Conditions necessary for the sustainability of an emerging area: The importance of banking and financial regional criteria," Journal of Multinational Financial Management, Elsevier, vol. 17(4), pages 317-335, October.
    5. Carol Alexander & Anca Dimitriu, 2003. "Equity Indexing: Conitegration and Stock Price Dispersion: A Regime Switiching Approach to market Efficiency," ICMA Centre Discussion Papers in Finance icma-dp2003-02, Henley Business School, University of Reading.
    6. Soedarmono, Wahyoe & Machrouh, Fouad & Tarazi, Amine, 2013. "Bank competition, crisis and risk taking: Evidence from emerging markets in Asia," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 23(C), pages 196-221.
    7. Pratap, Sangeeta & Urrutia, Carlos, 2004. "Firm dynamics, investment and debt portfolio: balance sheet effects of the Mexican crisis of 1994," Journal of Development Economics, Elsevier, vol. 75(2), pages 535-563, December.
    8. ManYing Kang & Marcel Ausloos, 2017. "An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies," Economies, MDPI, vol. 5(4), pages 1-23, November.
    9. Kane, Edward J. & Klingebiel, Daniela, 2004. "Alternatives to blanket guarantees for containing a systemic crisis," Journal of Financial Stability, Elsevier, vol. 1(1), pages 31-63, September.
    10. Kim, Woochan & Wei, Shang-Jin, 2002. "Offshore investment funds: monsters in emerging markets?," Journal of Development Economics, Elsevier, vol. 68(1), pages 205-224, June.
    11. Naiwei Chen & Meiya Chang, 2013. "Financial Crisis and Corporate Liquidity: Implications for Emerging Markets," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 20(1), pages 1-30, March.
    12. Fallon, Peter & Hon, Vivian & Qureshi, Zia & Ratha, Di, 2001. "Middle-income countries - development challenges and growing global role," Policy Research Working Paper Series 2657, The World Bank.
    13. Marcin Chlebus, 2016. "One-Day Prediction of State of Turbulence for Portfolio. Models for Binary Dependent Variable," Working Papers 2016-01, Faculty of Economic Sciences, University of Warsaw.
    14. Peter Nunnenkamp, 2000. "Towards a new international financial order: Why reform progress is so slow," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 35(1), pages 23-30, January.
    15. Burnside, Craig & Eichenbaum, Martin & Rebelo, Sergio, 2001. "Hedging and financial fragility in fixed exchange rate regimes," European Economic Review, Elsevier, vol. 45(7), pages 1151-1193.
    16. Salahuddin, Sultan & Kashif, Muhammad & Rehman, Mobeen Ur, 2020. "Time Varying Stock Market Integration and Diversification Opportunities within Emerging and Frontier Markets," Public Finance Quarterly, Corvinus University of Budapest, vol. 65(2), pages 168-195.
    17. Marco Rocco, 2011. "Extreme value theory for finance: a survey," Questioni di Economia e Finanza (Occasional Papers) 99, Bank of Italy, Economic Research and International Relations Area.
    18. I.Igal Magendzo, 2002. "Are Devaluations Really Contractionary?," Working Papers Central Bank of Chile 182, Central Bank of Chile.
    19. Shalendra D. Sharma, 2002. "Beyond the IMF Medicine: Thailand's Response to the 1997 Financial Crisis," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 5(1), pages 27-49, March.
    20. Marcin Chlebus, 2014. "One-day prediction of state of turbulence for financial instrument based on models for binary dependent variable," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 37.

    More about this item

    Keywords

    banking; non-performing loans; asset management companies; China;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bis:biswps:115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.