Study On The Risk Management Of Financial Derivatives In Chinese Banks

In the last two decades, financial derivatives grew dramatically in the international financial market. They perform an important function of risk management. Meanwhile, they also cause risks. There are many cases of large losses and bankruptcy of banks caused by the failure of financial derivatives management. The financial derivatives business in Chinese banks dates back to 1990s.But the activities grew slowly due to many factors. On February 4th 2004, China Banking Regulatory Commission released Provisional Administrative Rules Governing Derivatives Activities of Financial Institutions and it carried into execution on March 1st, 2004. Some Chinese commercial banks got the approval of conducting derivative activities from CBRC one after another. And so do some foreign banks which locate in china. The problem of derivatives risk management has arisen. Thus, it is of practical significance to discuss how Chinese banks manage the risk of financial derivatives.The dissertation comprised five chapters:Chapter 1 gives a general introduction to derivatives, including the definition, the function and the risk and gives two cases relevant to the risk of derivatives.Chapter 2 introduces how the banks in the developed countries manage the risk of financial derivatives, including risk valuation, internal risk management and external supervision. We can learn from those and take some measures which...