THE IMPACT OF ASSET SECURITIZATIONONBANK PROFITABILITY INCHINA

Abstract

As an emerging derivative, asset securitization has developed rapidly in recent decades. Asset securitization has clearly become one of the most important financial innovation tools in developed economies. With the outbreak of theglobal financial crisis in 2008, many experts and scholars at home and abroadbelieve that the excessive use of ABS tools is the root cause of the global financial crisis. Credit asset securitization products can package the underlying assets andsell them to special purpose vehicles, thereby increasing the issuer's own liquidity. Through credit products, commercial banks can securitize assets such as loans that are less liquid, and convert them into more liquid assets. Therefore, credit asset securitization can improve the profitability of commercial banks. This researchmainly discusses the related issues of asset securitization of commercial banks inChina. This study used secondary data from seven commercial banks from2008to 2017 for quantitative research. Including the characteristics of the asset securitization of China's seven major commercial banks, existing problems andthe impact of asset securitization on the operation of commercial banks inChina.Through empirical analysis, this paper mainly selects four independent variables to study the impact of credit asset securitization business ontheprofitability of Chinese commercial banks, including capital adequacy ratio, non-performing loan ratio, loan to deposit ratio and profit rate. The final result shows that asset securitization is negatively correlated with profitability of bank. Finally, last chapter puts forward some suggestions for the development of asset securitization business of commercial banks in China.