Research On Credit Risk Management Of Commercial Banks In China

Since the Reform and Opening, China has formed a relatively sound financial system after a number of financial reforms, and the financial industry plays an increasingly important role in the socialist economic construction and living standards improvement. As the most important part of the financial industry, the commercial banks are indispensable. Under the environment containing instability in the economic situation and financial product innovation, to remain stable and pursue more development, commercial banks must focus on the risk management., As the main risks commercial banks face, the soundness of credit risk management systems directly relates to the survival and development of commercial banks.However, there are many defects in credit risk management in China: the quantification of credit risk is not strong and the sound credit risk management system has not been established. Therefore, how to strengthen credit risk management, improve the quality of credit assets, establish a sound credit risk management system , are the academic focus, which is also the topic of this article. This article contains 5 chapters. Chapter 1 is the introduction, describing the background and significance of the study of credit risk management, and presenting the status of academic research. Chapter 2 is the overview section of commercial bank credit risk management, discussing the sources of credit risk and the modern process of credit risk management in western commercial banks. The chapter respectively discusses the incomplete contracts, asymmetric information theory, which are the two root causes of credit risk , and the modern process of credit risk management in western commercial banks. The purpose of this chapter is to discover the root causes and learn from foreign advanced management process. Chapter 3 is the part of status of credit risk management, including the performance and causes of credit risk, the effectiveness and problems of credit risk management, which are in order to pave the way for the fifth chapter. Chapter 4 is the empirical analysis part of the article ,introducing the KMV model into the credit risk analysis of listed companies in China. The measurement result proves that the KMV model is good for China and can provides some help to improve the quantification of the credit risk management. Chapter 5 provides lots of recommendations from both the microscopic conditions and the macroeconomic environment for commercial bank of China to improve credit risk management, including internal controls, risk measurement, risk transfer, the social credit system and the external supervision, etc. There are many innovative points in the discussion of internal controls part and credit risk identification and measurement capacity part.