A Study On The New Basle Capital Accord And The Credit Risk Management Of China's Commercial Bank

During 1980's and 1990's of the twentieth centuries, the constantly explodedfinancial crises brought high attention to the international financial area and manycountry governments about the credit management system. Since 2002, Chinesegovernment and its financial institutions were also going to start the establishment of itscountry civil credit management. This article is aiming to build a credit riskmanagement system for the commercial banks in China and provides a practicalintegrative credit risk management framework according to the spirit of the New BasleCapital Accord (the Basle II). The structure of this article is like the followings: The first chapter introduces firstly the basic concepts, characters of credit risk andits system. The Basle Accord I (Published in 1988) has been acknowledged as a standardindustrial guideline to all banks in the world. The aims of the Accord are to ensure thestability and security, and establish fair competitive mechanisms in the internationalactive banks. Since 1996, the Basle Committee has modified and supplemented theBasle Accord I for many times, and much more attention has been paid by the world.Therefore, in the second chapter, the evolvement of the Basle Accord and the featuresand advantages or disadvantages of the Basle Accord have been investigated. We alsoexplore the financial theory fundamental for the calculation methods used in the capitalrequirement determination in Basle Accord â…¡. The third chapter introduces two current major commercial bank credit riskmanagement models. On the basis of the comparison of the two models, the biggestdifficulties of establishing credit risk management models were revealed.The fourth chapter analyzes the current situation of China commercial bank creditrisk management, which mainly includes the capital quality of those banks and itscontribution factors, as well as the experiences and difficulties on credit riskmanagement. According to the analysis of Chinese current situation, the fifth chapter suggestssome tentative ideas and implementing plans for China commercial bank credit riskmanagement on the principle of the New Basle Capital Accord.