Research On Small Enterprise Credit Risk Management Of Bank Of Communications Shanghai Branch

Since China's reform and opening after 1978,small enterprises have grown into the most vigor and vital sector of China's socialist market economy, they are one of the most important driving forces in China's economic growth. In the mean time,the development of credit business for small enterprise has become the practical needs and strategic choice for a commercial bank in the areas of business restructuring,competitiveness enhancement, risk reduction and achieving sustained and stable development. The author of this paper works for Bank of Communications Shanghai Branch.Its small enterprise credit operation started in 2006.After years of development, this operation has gained some scale.However, the pace of development is slow and its contribution of the entire branch's profit is still very limited.Compared with same business of the industry leaders,there are obvious gaps.This paper first analyzes the causes of small enterprise credit risk, which contains elements of small enterprises themselves and elements from commercial bank side as well.The paper then studies small enterprise credit business status of Bank of Communications Shanghai Branch in recent years and compares with the status of the industry. The author concludes that the "prudence principle" has been overused within Bank of Communications Shanghai Branch for small enterprise credit operation.The idea of "fear risk, don't want to do,"is widespread through all related operation units. The operation has several shortcomings,such as demanding credit customers with high self-owned property, strict requirements in accounting,longer lead time in loan approval and slow response in dealing with unexpected market risk after loan is issued etc.Operation with these problems is not well adapted to the business nature of most small enterprise.The root cause of these problems lies in the evolution of Bank of Communications' small enterprise credit business,which has adopted many practices for large enterprises that do not fit for small enterprises.Area needs improvement covers different loan issuing phases:survey, approval and post-loan management. To deal these problems, the author proposes improvement ideas and measures,including:optimize customer credit ratings,detail field survey outline,establish appropriate mechanism to determine the amount of credit, open up multiple ways of guarantee,accelerate product innovation,enhance service level of personalized financial services,implement scientific loan pricing method to balance risk. After credit is issued,define the scope,method and frequency of post credit audit, establish and enhance credit risk early warning mechanism and voluntary withdrawal system.