The Research On Internal Credit Rating Systems In Industrial And Commercial Bank Of China Hunan Branch

The new revised version of "International Convergence of Capital Measure and Capital Standards" by the Basel Committee On Banking Supervision, compared to the original one in 1998, has brought forward great changes in the judgement of credit risks and the calculation of credit assets in commercial banks. A "new calculation standard" and its alternative, the internal credit rating method, have been presented, which indicates the important standing of internal credit rating among the whole credit risk management system and banking supervision.The thesis observes some main theories on international credit risk measuring, practice and experiences of internal credit rating systems in U.S. commercial banks. Most foreign banks nowadays have estabished their own unique internal credit rating systems in accordance with their main business. Such systems have made detailed guidance on rating targets, credit grades, evaluation methods, factors involved (like economic cycle, characteristics of industry, market competition, management, share structure, country ceiling etc),actual default ratio, loss statistics, rating review, external rating results and general rating method which combines quantitative and qualitative evaluations. By covering most main aspects of credit risks, an ideal credit rating system has become the core of a bank's credit risk management.The thesis also makes analysis on the existing problems of internal credit rating systems in Industrial and Commercial bank of China. In China, the history of customers credit rating practice in commercial banks is short. Thus there are many deficiencies in the areas of guiding idea, evaluation method and staff training. Especially in evaluation method, the problems of poor accuracy in quantiative models and lacking study of cash flow and industry trend have indirectly caused the long-standing high credit risks in our commercial banks. Therefore a practical credit administration system must be set up to disclose credit risks.Bases on the study and analysis above, the thesis focuses on constructing such a system applicable to Industrial and Commercial bank of China, which involves the whole credit risk management procedure, from the collection of customer information, to a credit evaluation method based on financial analysis, to the construction and usage of credit MIS.