The Development Of Credit Risk Transfer Market And Its Impact On Commercial Banks

For the past few years, there is a rapid development in credit risk transfer market .With a variety of credit risk transfer technology, commercial banks can transfer credit risk according to their own portfolio management ,solve the "credit paradox" and manage credit risk with more initiative and flexibility. However, the outbreak and deepening of the subprime crises also remains us that, the development of credit risk transfer market brings negative impacts to the prudential operations of commercial banks and affects the stability of the financial system as well as promoting Commercial banks to improve the credit risk management skills. Commercial banks may use the information superiority that they have when the credit risk transfers to harm the credit risk recipients' interests. Especially when commercial banks realize that they can transfer the credit risk, in their initial loans, they will relax the requirements for the loans and will also be negligent in the supervision of these loans, but the spread of the "moral hazard" act would endanger the whole banking system or even the stability of the entire financial system. The outbreak and deepening of the subprime crisis was the profound lessons from this mechanism. What positive and negative effects will the credit risk transfer market bring to the commercial banks? As for the market, how would the monetary authorities act to strengthen the supervision and regulation to avoid the negative impacts? This paper will discuss the above questions.On the basis of analyzing the history and current situation of credit risk transfer market and related pricing technology, in this paper, we introduce a systematic analysis and study on the positive and negative impacts of the transfer of credit risk for commercial banks and other financial institutions. On this basis, the paper analyzes the interaction between the credit risk transfer and the subprime crisis, and analyzes our country's commercial banks' initial attempts to credit risk transfer currently, as well as the regulation of commercial banks in the process of developing credit risk transfer market.The paper is divided into five chapters, as follows: The first chapter is the introduction, which introduces the research background, studying purpose, outlooks and the overall framework. The second chapter analyzes the credit risk transfer market and the development of pricing methods. This chapter also gives a brief preliminary summary about the current credit risk transfer market in foreign countries and the corresponding area in China. The third chapter discusses positive and negative effects of the credit risk transfer market on commercial banks and the impact on the financial system. Combining the analysis of causes of the subprime crisis and the practice of insurances of credit risk transfer in our country, the fourth chapter focuses on the significance of developing the credit market for China's commercial banks. The last chapter discusses how to improve the supervision on commercial banks through the development of credit risk market.