Applied Studies On IRB In Credit Risk Management Of The Commercial Banks Of China

After a long period, credit risk is still the primary risk which our commercial banks will face. The New Basel Capital Accord provides new credit risk measuring methods—Standardized Approach and Internal Ratings Based Approach(IRB). IRB permit commercial banks, which have high risk management level, use internal rating results to certify risk weight and draw capital, then the capital adequate rate and credit risk will connect closely. America, EU and other countries, Singapore, Australia, South Africa, etc. execute The New Capital Accord on time. With the development of finance globalization, our commercial banks need to connect with international banks and execute IRB according to The New Capital Accord to improve the competitive power.Recent years, our commercial banks, The Industrial and Commercial Bank of China, The China Construction Bank, etc. prepared for the execution of IRB. Some banks even build their rating systems. But compare with developed countries, the IRB building of our commercial banks fall behind. Our commercial banks need to use for reference advanced experience of foreign commercial banks, relate our country's environment, build our rating system and related systems.First, this paper introduces The New Capital Accord and two credit risk measuring methods—Standardized Approach and Internal Ratings Based Approach(IRB), compares IRB with the Standardized Approach and conventional rating methods respectively, elaborates the necessity of executing IRB. Then analyses the main problems that our commercial bank facing and the reason. At last, this paper puts forward three methods for our commercial banks to execute IRB—technology construction, related system construction and environment construction.