Abstract:

The non-performing loans of state-owned banks in China are virtually government debts. The total amount of government debts, however, is not so optimistic as a popular view describes. The treatment of non-performing loans should be considered seriously and urgently. In recent years some progress has been made in decreasing the bad loan ratio. But an analysis of market and specific data indicates that the risk management and solution to bad loans not only depend on banks themselves, but also on proper financial supports from government and en reforms and innovations of banking industry. As a financial requirement, the securitization of mortgage loans instead of non-performing loans should be first dealt with.

Key words: state-owned bank, non-performing loan, capital risk, risk management