Study On The Risk Management In Consumer Credit Of Commercial Bank

The definition of consumer credit means in order to stimulate consumption and improve consumer's living level, the financial institution provide consumer the credit for the given commodities' using the consumer's future income as a guarantee.The commercial bank of China has two impetuses of developing consumer credit. One is the necessary of exploring new profit points, the other is the necessary for the government to enlarge the domestic demand and promote economic growth. At the end of 1997, the country's scale of consumer credit was only 17.2 billion RMB, but with the effect of the two impetuses since 1998, the consumption scale has been enlarging. At the end of 2001, the commercial bank's balance of consumer credit had achieved 699 billion RMB, which increased 681.8 billion RMB and was 39.6 times than that of 1997. Moreover, the percentage of consumer credit in the whole credit had increased from 0.3% to 6%. The categories of consumer credit according to consumption area can be divided into such as housing, cars, schooling, and so on. Now the commercial bank is facing very huge risk in its consumer credit business because of many reasons. The four major reasons can be concluded as following, the first is the lack of individual credit system; the second is the low reputation of individual credit; the third reason is the huge enterprise operation risk caused by distemperedness of market rules; and the fourth one is the low anti-risk ability of Chinese commercial bank. In such severe situation, the bank should take active measures to enhance the anti-risk ability of consumer credit in order to assure the safety of commercial bank's credit assets.Under the precondition that the commercial bank has a relative perfect interior operation management system, the bank will be facing the following major consumer credit risks, one is credit risk , the other is market risk. The two risks origin from three kinds of uncertainty, the first uncertainty is consumer's behavior; the second is consumer's repaying ability; the last is the uncertainty of the consumer credit market. In order to control the risks of consumer credit, active measures should be taken at once. The aim of this thesis is offering a series of anti-risk measures through analysis. The thesis is made up of five chapters, the first chapter introduces China's background of consumer credit's development, the major risks and brings forward the central issue; the second chapter researches the risk caused by the uncertainty of consumer's behavior and the controlling measures; the third one studies the uncertainty of consumer's repaying ability and the relative anti-risk measures; the fourth one researches how to control consumer credit risks ulteriorly, through assets securitization technology after credit is offered; the fifth chapter describes the risk caused by the uncertainty of consumer credit market circumstances, which is called interest rate risk, and the measures of controlling it.