Study On Credit Risk Management Of Rural Credit Cooperatives

Rural credit cooperatives are important components of China's financial institutions and part of the main force of rural finance. The existing non-performing assets of the rural credit cooperatives is still high compared with state-owned commercial banks due to historical development and services in the fields of reasons. There are still many problems should be solved in the credit management and risk prevention and control measures, In particular, credit risk is in the role at the apex among the current loan risk ,so risk prevention should be focused on the credit risk . Therefore, it is particularly important to study the credit status and the formation mechanism of credit risk, as well as prevention and control capabilities in order to improve credit risk loans and reduce the risk of the occurrence of the credit risk of loans and improve their operational efficiency to provide effective financial support to the building of new socialist rural areas.This paper is based on commercial bank credit risk management and loan classification and credit risk prevention theory using empirical research, normative research and comparative analysis. Firstly we analyze credit risk of all loans of rural credit cooperatives, secondly, we analyze the mechanism of credit risk from the rural credit cooperatives, lenders, as well as external environment, at last ,the measures to improve the credit risk management of rural credit cooperatives were put forward.This paper is divided into six chapters. Chapter I is Introduction. Chapter II is for the theory of the concept ,the formation and the prevention of the credit risk . Chapter III is the empirical analysis of the credit risk for the loan. Through the survey of the Shandong rural credit cooperatives as well as Dongping rural cooperative banks, we analyze the status of credit risk from the loan type, credit quality, lending procedures, of rural credit cooperatives. Chapter IV is the formation mechanism of credit risk. According to the above findings, the main countermeasures to improve the loan credit risk management of the rural credit cooperatives were put forward in Chapter V. Chapter VI is the conclusion of the study.The main conclusion of the study:1 Through the study we believe: Due to historical reasons and the special nature of clients, rural credit cooperatives is lag behind commercial banks and foreign financial institutions in the same in the management of credit risk . Rural credit loan credit risk management is basically qualitative analysis method which was decided by the rural credit cooperatives in their function and location and played an active role in the actual operation and management. But with development of the economy and society, This approach can not fully meet the needs of today's Rural Credit Cooperatives. We need to introduce the quantitative analysis, using a series of modern credit risk identification method such as Credit risk model analysis.2 Through the analysis of loans, issuance, recovery process of the rural credit cooperatives in Shandong Province and Dongping rural cooperative bank, we find that the management problems of the generation mechanism in credit risk is mainly the result of rural credit cooperatives, lenders, external environment, three factors. For the Institutional system of rural credit cooperatives, property rights is not clear, internal control and management is chaotic, historical burden is too heavy and there are so many internal risks . Loan classification is vague. Agriculture itself is the high risk of weak industry, so it is the special nature of rural credit cooperatives serve. In the external environment, due to asymmetric information, the social security system is not perfect, government subsidies intensity too small, the arrangement of local management systems deficiencies, lack of security mechanisms such as rural credit cooperatives has greatly increased the likelihood of credit risk loans.3 Through the study, credit risk management policy proposals made to improve the rural credit cooperatives were put forward, including improving the property rights system to speed up the reform of rural credit cooperatives, improving internal control, strengthening loan processing workflow management, establishing a risk compensation mechanism, agricultural insurance system, the credit guarantee system and the construction of macroeconomic credit environment.