The Research On Credit Risk Management In Railway Financial Leasing

Financial leasing industry was introduced from Japan to China in 1980s, which was represented by the foundation of the China East Leasing ltd. Co. Through the 20 years fast development, financial leasing is promoting the economic development and facilitating in various fields, especially for introducing foreign investment and advanced technology and equipment. Furthermore, financial leasing plays a crucial role on the modernization of middle to small size companies as well as on the import-and-export ability promotion. However, reviewing the whole evolution of financial leasing, we still have some extra miles to go compared with foreign countries for the reason that the financial leasing market penetrating rate is relatively lower, which is inconsistent with China's economic dimension. Therefore, as for an country whose financial leasing industry is still on the initial evolution step, the absolute and relative scales of leasing transaction are both too small while have a immense develop potential. From the long view, financial leasing industry will have a bright future in China. Nevertheless, because our supervise condition for credit risk on financial leasing is not enough and the market is not standardized, the financial leasing has great obstacle in the implementation and development. Besides, related mechanisms for managing credit risk on financial leasing has not maturely developed but instead localized in the preventive status, thus there doesn't exist an effective credit risk management method in the leasing market.As an active and reliable risk evaluation instrument, the introduction of VaR will certainly bring a practical method to measure the credit risk in financial leasing, consequently contributing in the management and development of financial leasing industry in China. The paper first reviews advanced overseas and domestic theories related with the implementation of VaR in financial leasing in three major aspects, emphasizing the analysis on various modern credit risk valuation models, demonstrating the reason and the drive to use CreditRisk model as the valuation model in estimating credit risk in financial leasing. Furthermore, this part analyzes and discusses the 3 building blocks of the model in order to adapting CreditRisk model in financial leasing business. Through the discussion, the paper also provides possible sample segmenting methods and other issues may evolve from the construction of the model. In the fourth part, the paper discusses the possible measures to prevent and diversify credit risk of...