The Management And Control Of Credit Risk Of State-Owned Commerical Banks

In the process of the economic systems restructing and opening is deepening, boththe internal and external competition pressure requirecommercial banks in China tomanage the potential risks more efficiently so as to stabilize the financial system.Credit risk is among one of the most imminent risks that are faced by state-ownedcommercial banks. Therefore, to enhance credit risk management is advantageous inthe safety of the commercial banks as well as in the stability of the banking sector, aswell as the sustainability of economic growth.This paper composes six parts:The first chapter is an introductory remark;The second chapter analyzes some kinds of risks that commercial banks face with,among which the credit risk is emphasized.The third chapter analyzes the cause of credit risk. We find that it relates not onlyto banks' lack of motivity and experience in credit risk management, but also to thedistortous relationship among the governments, banks and enterprises, as well as themacro-economic environment;The fourth chapter discusses the framework of credit risk modelling andmanagement in the New Basel Capital Accord, which includes intemal credit riskmanagement approach and external supervision. The internal credit risk managementcomprises risk recognition, risk weigh classification and control methords. Theexternal supervision is composed of three pillars: minimum capital requirement,supervisory review process and market discipline. This charpter also dissertates twoways to calculate supervisory asset, namely Criterion Rating Method (CRM) andInternal Ratings-Based Approach (IRB), and analyses the risks of commercial banksby the risk control model;The fifth chapter gives out an international comparision on the jurisprudence ofcredit risk supervisory and comparing the lex among US, EU and Asian countries;The sixth chapter puts forward some suggestions on how to strengthen the credit risk management of China's commercial banks.Firstly, to innovate the property right system of state-owned commercial banksand enterprises, to actualize shareholders diversity in commercial banks, andestablishing the new relationship among the governments, commercial banks andenterprises during the marketability process.Secondly, to improve the macro-economy environment, it is especially importantto reform the financing system and pattern to promote financing securitization, andconstructing a reasonable mode between direct financing and indirect financing.Thirdly, to strengthen the internal control system in banks and inducting theadvanced skills of the credit risk management of western modern commercial banks,so as to improve self level of the credit risk management.At last, China's Banking Regulatory Commission should strengthen therisk-based prudential supervision to catch up with the process of economic reforms inChina and the financial globalization.