Commercial Bank Credit Risk Management Of United States

Commercial bank credit risk management is the most important part of the riskmanagement system. It is the key risk constraints of categories I and II of the BaselCapital Accord, and it is also the core part of commercial bank management.Since the reform and opening， China’s commercial banks have madetremendous progress in their operation and more progress can be found in the area ofrisk control and management. But as the ability of credit risk management, thecomprehensive construction of integrated risk management is still absent, so is thequantitative risk analysis and the study of credit risk doesn’t take the creditmechanism of internal control evaluation into consideration. That is the emergentproblems to be solved in China.The development of United States’ commercial banks has a long history. Theyhave a high level of maturity and marketization. American commercial bank historydata has strong continuity, and the quantitative risk analysis which is already matureis widely used among them. They also have completed outside regulatory system.The experience of credit risk of United States’ commercial banks needs to be learnedand studied in our country. However, some problems and lessons exposed duringthis financial turmoil also need high attention from us.The methodology of this paper is the combination of history and logic analysis,qualitative and quantitative analysis, the international comparative analysis,mathematical model analysis and statistical analysis, etc. Some section has carriedon the empirical research and literature research. The main purpose is to Explains therelationship between various independent variables and one dependent variablethrough the purposeful and systematic analysis according to the observation,recording, measuring the phenomenon accompanied with the changes to determine the causal relationship between the phenomena of the conditions and activities.The main content of this dissertation is divided into the following10chapters:Chapter1is an introduction. This chapter mainly began with the developmentof the current European and American financial crisis. The grim situation ofcommercial bank management risk is mainly affected by financial turmoil. Creditbusiness, which works as the main source of the profits, is facing increasinglyprominent risk. So the comprehensive management attention is required and thecommercial bank of United States is the reference of this research. This chapterillustrates the topics, purposes and research background of this article, and the theoryand practical significance of this study, introduces the research ideas and methods ofthis article.Chapter2is a general analysis of the commercial bank credit risk management.This chapter introduces the general principles, methods, the basic concept, commonpart of the credit risk management and credit risk management framework includingan overview of the universal implementation of Basel capital agreement ofcommercial Banks I, II, III.Chapter3is the theoretical review of relative basic theory on commercial bankcredit risk management. This chapter focuses on asset/liability management theory,comprehensive risk management theory, portfolio management theory, risk theory ofeconomic capital and the Basel capital accord I, II and III.Chapter4is the historical evolution and characteristics of the commercial bankcredit risk management. This part mainly analyzed the commercial bank credit riskmanagement development and general characteristics.Chapter5is credit rating of the commercial bank credit risk management. Thischapter illustrated the use of the commercial bank credit rating by using credit ratingstandards and principles (mainly the classification of customers, the principle forrating, characteristics, etc.), the credit rating index system and the actual case.Chapter6is the study of the commercial bank credit risk management and riskidentification. This chapter mainly focuses five issues as followed:(1) research of main factors which influence the credit risk and the formation of endogenous risk;(2) all kinds of dominant or logical characteristics of credit risk (the commercial bankrisk to the customer such as finance, liquidity, enterprise products and periodic,another examples are financial product risk form inside and outside the product risk,so are the market risk and country risk, etc.);(3) the main method of riskidentification;(4) the main credit instruments of risk identification and (5) designand use of quantitative model for credit risk.Chapter7is the United States’ style of the commercial bank credit riskmitigation. This chapter mainly focuses there issues:(1) General mitigation methodfor United States’ commercial banks;(2) the United States’ commercial bank’s riskmitigation preferences and collateral which means how to build a qualified collateral;(3) analysis the mitigation function of portfolio management by means of instanceanalysis.Chapter8is measurement and assessment of the commercial bank credit riskmanagement. Many mathematical model analyses are involved in this chapter. Thischapter mainly focuses on issues as followed: default rates, default loss rate and themeasurement of default risk assets, identification and measurement of risk-weightedassets and the economic capital, design and construction of all kinds of riskassessment and model (such as traditional methods of country risk, classical creditevaluation method or z value model, ZETA model and multiple differences,established the multiple Beloit experiment with LIGIT analysis).Chapter9is the commercial bank credit risk internal control mechanism ofUnited States. This chapter focuses and analyses on the content of the United States’commercial bank credit risk internal control framework, internal controlmanagement tools and the target, the internal control system and soft constraintsmainly from the perspectives of internal and external.Chapter10is the experience and enlightenment of United States’ commercialbank credit risk management to our country. The experience and enlightenment arestudied mainly from two aspects: The first is the implications for China’s commercial banks, such as strengthen credit risk identification, the use of credit instruments, riskmeasurement, etc. The second is Strengthen internal control mechanisms in thecredit risk and cultivate good credit culture actively.