Case Study on Risk Management of Bankruptcy Event of Baoshang Bank

Abstract

 It took more than a year from the takeover of Baoshang Bank by the People's Bank of China and the China and Insurance Regulatory Commission in 2019 to the bankruptcy of Baoshang Bank Co., Ltd. by the Beijing No. 1 Intermediate People's on February 7, 2021. The bankruptcy of Baoshang Bank reflects various risks within the bank, and indirectly reflects some common problems among small and medium-sized banks. There are numerous small and medium-sized banks in China, mainly serving small and micro-sized enterprises. In the past, due to supervision by relevant departments, small and medium-sized banks expanded their business scale in order to achieve rapid development. However, in recent years, with the downturn in the-economy and the deleveraging of finance, some small and medium-sized banks have limited management capabilities, leading to significant problems in credit risk, corporate governance, asset quality, and capital adequacy ratio. This paper takes the bankruptcy of Baoshang Bank as an opportunity to conduct a more detailed and cautious analysis of entire event, thereby revealing the current development predicament of small and medium-sized banks as a whole, and proposing some feasible solutions.