A Study On Credit Card Risk And Risk Management Of China

In recent years, credit card business develops rapidly since the first credit card issued in 1985 by Bank of China in Chinese. The credit card amounts increase from 1,550,000, issued in 2002 to 56 million, issued in 2006.When GDP per person reaches USD5000, the credit card business will enter a period accepted universally in which credit card developed in high speed according to the experience of mature marketplace. There are about ten cities already reach this scale among the Chinese cities in 2006. The lifecycle of credit card is entering to the maturation period from the development period which began from 2002. Not only foreign financial institution but also domestic banking institution think that there are millions of merchant chances and will have a beautiful prospect in the Chinese credit card market.However, the general developing law of credit card indicates that the credit card business is difficult to gain sustainable development and will make a destroy influence on financial operation system if there are no effective system to keep risk away and to get profits. During the process of credit card developing, there are lots of different risks in different degree in many countries and areas. In November of 2003, Korea's credit card crisis caused a number of banks to bankrupt this business. In June of 2006, American credit card customers'information were gone out. Chinese commercial banks'credit card business annually suffers from important loss either. With the further development of Chinese credit card business and the threatening caused by furious competition of foreign banks, economists and bankers put their eyes on how to use foreign advanced experience and technologies for reference efficiently and set suitable technology system of controlling risks to promote Chinese banks'credit card business healthily develop. Therefore, it is significant of setting perfect system of risk controlling and mine high-efficient technologies to control the risks of Chinese credit card business by analyzing the causes of the business'risks.Firstly, the basic theories on controlling risks of credit card business are summarized, which is the theoretic base to draw the strategy to manage credit card risk. Then, it studies successful experiences on controlling risks of credit card business in Europe and American. Thirdly, the thesis analyzes the status of Chinese credit card management and the causes that cause Chinese commercial bank's credit card business to face risk. At last, the thesis puts forward improved and suitable risk controlling frameworks and methods.