The Guidance And Effect Of The IRB To The Banking Of China

Basell II is regard as the one of the most influential agreements at the international banking, Nowsdays, it becomes as "international criterion", it is regarded as "holy pact". While being as the one of the most important content in Basell II, the "IRB"(the inter-rating based approach) becomes a method of the standard risk rating and risk measure. Nowsdays, not only the Group of Ten and the European union will bring the Basell II into effect at 2006, but also Australia,Singapore and part of the developing countries ,like South Africa,India and Russia etc, will take positive measures to implement Basell II too.The paper falls into five sections:The first section is preface, which consists of the research backgrounds, purposes and approaches . The methodologies adopted are dynamic analysis, historical analysis and induction contrasts.The second section emphatically discusses the basic content of the IRB stated in the Basell II .Firstly expatiates the definition of the "IRB", The IRB insists on taking normative and rational model to evaluate risk of the borrowers, through calculating the rating parameters ,such as PD,LGD,EAD, bank can get a series of risk data aboute an loan, then the bank can do a decision or not, the aim is reducing the loss as soon as possible; Secondly puts forward the homolgy and difference between the junior and the senior "IRB"; thirdly disicusses the inscapes of the"IRB"in detail, including probability of default (PD),Loss Given Default (LGD),risk exposure (EAD),and maturity (M); finally brings forward the the lowermost implement standard and significance of the IRB and so on. I hope to obtain useful enlightenment from them for establishing and developing of our own IRB.The third section analyses the world status in quo about the implement of the IRB, because the Basell II has became the "holy pact " among international banking, so every country plans on adopting the IRB to measure risk, but the status of everyong is different.As a whole, many large banks and part of medium banks in the European countries will decide to implement the junior IRB at 2004, by 2007 mostly European banks will put the senior IRB; While the banks in Asia and Africa gets behind the developed countriesThe fourth section emphatically analyses the necessity and feasibility of the IRB implemented in our China. The implement of the IRB is becoming an inevitable trend, it is also the inevitable requirement of reducing the banking risk and increasing income of the banks. It is necessary for breaking through the financial barrier and advancing our strength to implement the IRB, it is also necessary for participating in the world finance servings and heightening our competition to take the IRB. Meanwhile, emphatically dissects the shortages and questions on our IRB at present. At present, some domestic economists have achieved somewhere on the research about the IRB of the Chinese banks. There are a small literature involving the thorough and comprehenseive research of this topic.From the external aspect, fistly our finance market is immatureand faulty, price is not decided through market; secondly our finance rules are faulty currently, the system of credit is incomplete, runing short of credit; finally system and technology are not wholesome, all above these factors incumber the setting up of the IRB; From the inner aspect, firstly, our banking is lack of the data of the"IRB", the shortest maturity of the data required in the"IRB"is five years, while the maturit of data holded by our banks is no than more three years, at the same time , so mang our banks don't have data-base; secondly the establishment of the parameter and model needs so many hours, the method of the estimation runs to fix quantity, thirdlyi is shortage of pesons with ability which are accomphshede in IRB, these also effent our implement of the IRB.The fifth section is the paper's keystone, it is also the problem solved by this topic, under the base of the fourth section, this fifith mainly studies countermeasures. Nowsdays, because the implementing the IRB, we are lack of corresponding financial market, legal condition and system, so, firstly we should be under the guidance of government constantly perfect our finance market, making the price to be decided through market, standardizing the stock market; secongly perfects the financial laws and rules, seting up credit system of persons and corporations, finally establishes the system and technique matching the IRB, Because of the historical and practical matters, our banks does still not have eastablishment of the data-base, especially shortage of data,persons with ability and parameters and model of the IRB Therefor, firstly from now on, our banking build up the idea of data-accumulation, building the data-base of the pesongs and corporations as soon as possible, keeing the continuity of the maturity,the university of the data and the validity of the data; secondly is strengthening the cultivation and use of persons with ability, founding a troop of persons with highly ability which are well up in the IRB, At the same time, we should pay attention to external intercourse, absorb and make use of possitively the foreignly anvanvede experiment and methods, finally is quickening the exploiture of the IRB's model and indexes, translating the ration method to the method of the determine the nature combined the ration method., These problems stares us in the face, we onle quicken the research, expoiture and implement of the IRB at present, we could shorten the gap between us and the developmengt banks.