The enlightenments in the commercial bank of China by financial crisis

The negative influence caused by subprime crisis does not liberate completely, so it is not necessary for the bank of China to make adjustment according to the current serious situation. At the moment, the Chinese capital market is not perfect compared to the developed countries, the consciousness to the risk management of the bank is not sensitive, and it has low level of monetary and securities market, the commercial banks have bias awareness of creative financial instruments. Because the there is relative large bubble in Chinese real estate market, the market returns and risk of it are very high. Overall, the subprime crisis impact directly on the capital loss of the Chinese commercial banks which purchase the loan of related USA housing. Facing to the changing of economic structure in USA, the banks of China have to take measures to correspond to it.

The enlightenments in the commercial bank of China by financial crisis are as following: On the first point, due to the high market return in real estate in China, so the mortgage occupies large proportion in commercial banks, hence, the whole real estate market would impact the commercial banks in recovering loans. At present, the phenomenon in real estate speculation seems serious which may bring risk to the commercial banks. On the other hand, the regulation in real estate in China has a very big gap between it in USA. However, the subprime crisis made a sudden appearance to USA. So the Chinese commercial banks have to think deeply about how to defuse the risk of subprime market in a way.

 In my opinion, the Chinese commercial banks have to develop the financial innovation according to the market and demand of customer. There is different between the “demand” and “want”. “Demand” is the basic factor that people need it to satisfy their normal living standard, but “want” may be the desire of people. The former require is affordable and less risk, nevertheless, the latter may be hard to come true. So if the normal residents just need the house rather than villa, the commercial banks should just offer a loan up to the proper price to the house.