On The Perfection Of Credit Risk Classification Of State-Owned Commercial Bank

At the end of 2001, the Peoples Bank of China decided to carry out widely in China from 2002" five categories classification system "to loan quality. This is a great reform to loan risk management system of our banks and in the meantime a big act to protect financial security, and moreover an important link of joint between our banking after entry into WTO and international current rules. Five categories classification method is based on risk assessment and is the one that evaluates loan quality of bank. It is classified as pass, special mention, substandard, doubtful and loss as per risk degree. It is the worldwide current method to loan quality assessment and is tried out in commercial bank of our country from 1998. Within several years, it does have some actions to control loan risk and advanced loan management. However, we should know, there are some problems in practice, such as subjective judgment, the faultiness of loan management mechanism and the correlative environment. The action is weakened to a certain extend, and the actual operational management level and risk management situation could not be evaluated objective, factually and fairly. Along with the bank of foreign capital come in, because of entry into WTO, we must perfect credit risk classification as soon as possible if the commercial bank of China want to keep its legs among the drastically competition. So studying it has very important meanings.The text is consisted of four chapters altogether. Chapter one is the online of credit risk classification. It simply expatiate the theory about credit risk classification. Chapter two analyses the actuality of the method in our country. According as the actual case, this chapter open out the primary problems from classification standard, management of credit risk classification and exterior environments. Chapter three is the consideration about the quantitative analysis of credit risk classification. It bring forward thedecision-making analyses method, and the method can eliminate some influences caused by some subjective factors to a certain extend and can deal with some non-standard and non-norm problems in risk classification of commercial bank, though the character of science and rationality is to be verified by time. Chapter four is on the perfection about correlative reform. The perfection of credit risk classification could not only depend on the technique. Sometimes the system is rather than it in our country.The emphases of this text are the chapter two and chapter three. In chapter two, it emphasizes specially the problem that the qualitative analysis of the standard of credit risk classification is too much, and it is very hard to understand well and truly. So in chapter three, I specially bring forward an idea-" quantitative analysis" to offset some bad effects of qualitative analysis. And it is also the way that I want to innovate. The analysis is based on the decision-making analyses method. By disassembling the credit risk factors layer upon layer (up to the factor is the last), we can get a lot of factors that is quantitative and is easy to be understood. Then we could use the proportion and mark of each factor to get the result of credit risk classification. Because of the restriction of my acquirement and the lack of the data, there is only a probable idea, and has not the material quantitative model. However, I hope that it could be revelatory.