A Research Into China's Commercial Banking Risk Prevention

Guided by Deng Xiaoping's theory, this dissertation makes a systematic, comprehensive and in-depth examination of the risk issues the Chinese commercial banks are confronted with and the relevant preventive measures. Theoretically supported by institutional economics, information economics, monetary economics, corporation laws, and some modern enterprise theories as well, it takes reference in the modern commercial banking systems, and links closely with the present Chinese commercial banks reform and the present imminent risks. It covers both the basic theory about the commercial banking risks and the practical explorations in preventing such risks, which involve investigation in the current risk situation of commercial banking and analysis of risk causes. Moreover, it elaborates on the significance and principles in risk prevention, and the concrete measures for procedural fulfillment, including the internal controlling measures and the external supervising countermeasures. Then it goes on with highlights on the measures carried out by the Chinese commercial banks, making a comparison between the preventing and supervising measures adopted against banking risks in other countries, especially the developed ones. Coupled with lessons taken in the process of domestic financial reforms, it continues to make reference to the cases of both success and failure in these countries, and comes up with some strategies for risk prevention in the Chinese commercial banking. This dissertation consists of eight chapters.The first chapter, as the introduction, addresses the objectives, significance and its theoretical foundation for commercial banking risk prevention, presuming that financial risks come mainly from banking risks, whereas commercial banking risks are the focal point of the latter. Ever since the 1997 Asia Financial Crisis, especially after the September 11th terrorist attack and Argentina financial turmoil, international economic and financial plight has been increasingly subject to the potential dishevelment. Although great achievements have been made in the Chinese financial reform and innovations in Chinese banking systems, problems still exist and prevail. Moreover, China's economic transition and its misfit at theinitial stage of WTO membership are very likely to further catalyze the occurrence of banking risks. Banking risks and financial crisis are becoming more and more imminent and visual for China, to which we must attach great importance and take sound and workable countermeasures.The second chapter first gives definitions to economic risks, financial risks and commercial banking risks, and then moves on to detail the typology and types of commercial banking risks and analyze the effect mechanism of commercial banking risks: incentive mechanism, regulation mechanism, innovation mechanism and efficiency mechanism, laying solid theoretical foundation for the whole dissertation.The third chapter, based on surveys of risk situation of China's commercial banking, discusses the relation between system transition and bank risks, pointing out the main features of commercial banking risks in China: risk concentration and the disproportionate risk-profit relation, the covert cumulativeness and partial outbreak of risks, and risks' institutional and uncontrollability properties. Besides, further research is made into the performance of bank risks and macro-and micro-effectProceeding with the activity sphere and objects, the fourth chapter systematically analyzes the factors that give rise to commercial banking risks% which include the profound impact of institutional shift, the negative effect of enterprise system and activities, the inherent mechanical flaws of commercial banks, the override of governmental administration, the systematic defects of the central bank and the relative stagnancy of legal construction.The fifth chapter describes the worldwide preventive and regulatory practices against commercial banking risks at three levels. In regard to international banking, it gives specia...