Business Cycle And Bank Risk-control

Since the entry of the New Century, Finance, as the core of the modern economy, has become more and more noteworthy. As the core of modern financial system, commercial banking system should receive unprecedented high recognition. Commercial banking is a special kind of enterprise to handle. Therefore, since the start of commercial banks’ creation, every commercial bank has been looking for ways to reduce risks as much as possible.This article analyzes and compares Mainland China and Chinese Hong Kong’s commercial banking risk control systems. It focuses on the mechanism of risk, system framework, laws, government policies, risk measurement etc. It attempts to use Chinese Hong Kong’s risk control advanced theory in Mainland China’s risk control system, and emphasizes the investigation of Mainland China’s risk control model. This Article attempts to anaylsis the reaction of the bank risk-control systems in the economic fluctuate caused by the business cycle. Using the VAR and VEC models as the tool to find the connection between different of the reactions and the risk-control systems.According to Mainland China and Chinese Hong Kong’s commercial banking risk control system’s improvement, this article advises on internal prevention, operating system, and external condition. We should study developed countries’ (regions’) experience on risk control, and build a control model and a commercial banking risk measurement based on China’s national condition. We should also build and modify credit rating system to provide objective enterprise credit information for risk control, build and modify data bases to provide a basis for risk control, boost marketization and finance policy’s investigation to create a decent external condition to build a risk control model, and emphasizes on the building of credit culture and the creation of credit system.