A Study On The Factors And Recognition Of Credit Risk Of State-Owned Commercial Bank

Credit Risk is the principle risk in the bank operating activity. The credit risk accummulated in the past years by the state-owned banks is a danger sword of the sound economics system and is one of the difficult problems halting the financial system reform. It is very important to analyze the credit risk for preventing and dealing with the credit risk. The credit risk of the state-owned bank is studied by the means of the institutional economic theory, information economic theory and industrial economic theory in this paper.The disturbance from government, defects of the banking governance and the weakness of the ability to recognize the credit risk are the three most important factors of credit risk, which is the result of the study on the 186 banking loans. The disturbance from government influcented the credit risk of the state-owned bank greatly. The institution transition of the state-owned commercial bank and the changing of the disturbance from government are studied in this paper. The total special loans, which can reflect the disturbance from government, are 747 billion and the non-performing loans are 479.7 billion, which is about 19% of the 2500 billion non-performance loans. The concept of the banking corporate governance is studied. The defections of the banking corporate governance and its influence on the credit risk are analysised in this paper. The relationship between the credit risk and the banking corporate governance is demonstrated in a game model. The insider control facts, such as the loans beyond the limit, loan off the balance sheet, investment in other enterprise that happened in the history, revealed that the effect of banking corporate governance on the credit risk. The example that the improvement of the loan approval process prevents the credit risk demonstrated that it is effective to fulfill the banking corporate governance. Corporate capital structure, enterprise size and the default behavior are signals of the credit risk and the signaling games' equilibria are studied. As the transitional economy has special institution environment, the signaling games' equilibria are different from the theoretical models. Financialdata and loan asset quality of 200 public-owned corporate are processed by software designed by myself. The relationship between the credit risk and financial ratio was studied by statistics analysis with the SPSS software. It is demonstrated that debt ratio, asset turnaround, asset increasing rate, return on the asset, fixed asset turnaround, net profit turnaround are effective and independent to reveal the credit risk. The neutral network is used to predict credit risk with the financial information. It is showed that Neutral network is more accurate to predict than the Logistic model. The suggestions to lower credit risk are summarized at the last part of the paper based on the study.