In the paper, it is tried to explain some credit behaviors of Chinese commercial bank in the period of economic transition. The micro-mechanism for forming large amount of bad credit assets in commercial banks is analyzed. Collateral and co-signer's collateral could hardly provide informational signals due to some special factors in the period. The banking administr-ation system also makes credit interest rate lose its signal function. Enterprise's individual participation constraint condition can be very easily satisfied, so the credit game could not reach separating equilibrium which the bank would expect. In the period, the individual rational constraint condition of bank is also easily fulfilled. However, the post stage big transaction cost in liquidation leads to accumulation of large bad assets in banks.