Study On Credit Risk Management Of Commercial Banks In China

A series of financial events in the 1990s, such as the bankrupt of Barring Bank, Asian Financial Crisis and etc prompted people to rethink the credit risk associated with commercial banks. Accordingly, approaches and technology developed in the field of credit risk management, which finally lead to the birth of New Basel Capital Accord. Credit risk management thus becomes a critical question for all commercial banks. Based on the latest development of the Basel Accord, this project will be significant in terms of understanding the current condition of credit risk management in commercial banks in China, controlling non-performing loans, enhancing credit risk management and reducing the gap with well-managed world banks.Starting from the theory of credit risk management in commercial banks, I introduce the present conditions of credit risk in China's commercial banks; based on the new Basel Capital Accord, I provide in detail factors in credit risk management in China, such as the imperfect interior government mechanism, backwardness credit risk management tool, the imperfect social credit system and so on. Then,Ⅰanalyze and show how to learn from the strengths in the credit risk management in commercial banks in the US, Australia and Japan. In the end, combined with our circumstances in the development of banking industry and regulation,Ⅰtentatively offered several solutions so as to improve the credit risk management in China: transforming the functions of government to reduce intervention; fostering market-based competitive mechanisms; innovating on the ownership structures and building up modem enterprise systems employing credit derivatives to reduce non-performing loans.