Research On Credit Risk Internal Ratings In Commercial Bank Of Our Country Under The New Basle Capital Accord

Since 80's,the commercial banks and investors in many countries have had face more credit risks than any other time as the finance globlazation.According to the world bank report about the bank business critisis worldwide , the credit risk is the major factor leading banks to troubles.Especially in our country ,the credit risk is the most crucial problem that the bank business have to face.So we should study The New Basle Capital Accord,and establish the credit risks appraisal system. During the passing decade,the international credit risk measure method and management have been well developed.June 2004,the implemention of The New Basle Capital Accord is the signal of the credit risks rating system.Comparing with the former vision of The New Basle Capital Accordthe new one takes the assets risk factors to the minimum capital request.And the main view point of The New Basle Capital Accord is the Internal Ratings Based Approach (IRB).IRB can be classified as the beginning approach and the advanced Approach.To make the minimum capital demands more fit to the explsure credit risks in banks,is the main goal of the IRB.In IRB , the risk weighting Asset is equal to the EAD multiply the risk weighting.the risk weight is decided by PD , LGD and muture.As the implementing of the new supervision frame,many new theory on the risk supervision have been developed in The New Basle Capital Accord.In a short,to meauser the credit risks with the new IRB is another revolution of the global bank business.It is worth of studing deeply. With the development of the openness of the banks in our country and the publication of state-owned commercial banks,the commercial banks of our country need to catch up with the international advanced banks on the credit risks management.The internal rating system has not been established in the commercial banks of our banks yet.We used "yi yu liang dai"system quite a long time.Even the "five-degree classification"system is far from enough,compare with the IRB in The New Basle Capital Accord. The New Basle Capital Accord is considered as the"game rules"among the worldwide banking buiness.It's very influence not only to the banking business in the "ten-nation group"but also to the ones in other countries.It helps to make the Banking business competing openly and equally worldwide.So,if we want to participate the competition among the banking business world widely,we have to obey the general-accepted "game rules".Thus,the emergencial work we have to do now is the establish our own credit risks internal rating system after the joining of the WTO. Credit risks rating can be used to show the quality of assests or credit loans.That is to say it can reflect the possible loss of the credit loans directly or indirectly.However,to big commercial banks,credit rating is not only a relative degree,but also a reflection of the PD and the loss rate of the credit loans.At the same time,credit rating can reflect both the current credit rate and the future loss rate of the credit loans.The credit risk internal rating system will play a more and more important role in the modern commercial banks,especially in the large banks or muti-nation banks.It is multi-function in the bank management.It can be used in the approval of the loans,on the other side it can be used to supervise the assets combination.Classify the capital, price the assets,analyze the revenue,and combination the preparation of the loss.Of course , a more sound rating system is needed for the latter fuctions.An excellent internal rating could held banks to control the credit risks and provide a balance point between the profits and risks,provide the manager the whole assessment of the whole assests combination. From the current status,the credit risk rating in our country,has a long way to go to catch the advanced ones in the developed countries.This restricts the internal rating's functions to show and control the credit risks.