Research On Internal Rating System Of Commercial Bank

Credit has always been an old topic ever since ancient time. Credit risk has never disappeared since the emerging of ancient banks. Nowadays it even becomes prime risk that threatens global banks in their daily operation and management. However, Credit Risk Management really built up its position as a social science subject several decades ago. In deed, the past decades saw a number of new credit risk management tools, which allow people to effectively manage credit risks in a large area.The New Basel Capital Accord was published in 2004 June, which clarifies Internal Ratings-based approaches as credit risk analysis tool and technical platform. Since then, Bank Internal Rating system has been playing a significant role in a bank's risk management system. Several theories are involved in the development of Internal Ratings-based Approaches. Most international banks have put the theories into practice and now they have formed systematic operation mode. To keep up with international step, China's incumbent commercial banks are actively constructing their own internal rating system in a way to fully exert their advantages. However, China's medium-/small-scale commercial banks are encountering many difficulties in the process of building their own internal rating-based systems. As far as we know, the internal rating-based system becomes inevitable for a bank to cater for intensive international competition. Meanwhile, it also gives an opportunity for China's commercial banks to carry out comprehensive risk management system and strive for leap-forward development. This article will analyze existing problems faced by China's commercial banks in the process of building internal rating systems, finally some practicable strategies are proposed.The article consists of five chapters. Chapter one will introduce The New Basel Capital Accord and present how internal ratings-based approaches play a significant position in a bank's risk management system. Chapter two will introduce and analyze the theory of internal rating system from the aspects of concept, history, basic elements, key indices,...