A Research On The Loan Concentration And Risk Prevention Of Commercial Banks

Finance reform brings marketization and commercialization in bank's daily operation. Drive of commercialization and chase of profit cause the trend of credit concentration. Study of credit concentration is going more and more thorough. Credit concentration does bring more profit and is consistent with policy, but it may contain huge risk which is fatal in the viewpoint of long term. The key is to recognize credit concentration deeply and take full advantage of it while keeping its disadvantage away. In this paper we will discuss the effects of credit concentration comprehensively, analyze the behavior of commercial banks with game theory and try to explain the phenomenon of credit concentration from the angle of bank credit system, macro policy and behavior of local government. Empirical research is taken with data of bank of Shandong. Based on the analysis above, counter measures to prevent the risk of credit concentration are given.ChapterⅠ-Introduction. Under the background of banking reform and macro control, our study is considered to be of great importance. And then the concepts of our study are set up. Related literature both domestic and foreign has been studied and summarized. Research approach and research method are given.ChapterⅡ-Effects of Credit Concentration. Both sides of effects of credit concentration is detailed, especially the negative side.ChapterⅢ-An Explanation to Credit Concentration. With game theory process of credit concentrating of commercial bank is described and an explanation is given from different angles.ChapterⅣ- Empirical research on credit concentration in Shandong. With the data of credit and economy of Shandong from 2000, the correlation between the degree of credit concentration and location and industry and the risk it may bring is demonstrated.ChapterⅤ- Policy recommendations for Risk Control. According to the analysis above, suggestions are given to limit the negative influence untimely.