Credit Risk Management Of Commercial Bank In China

It is well known that credit risk management is the core part of risk management in commercial bank. It has been considered as the most key and challenging part in risk management area since 1990s. The continuous developments of financial market and financial derivatives make the credit risk surging and complicated. With a large global economic slowdown caused by "sub-prime" debt crisis occurred in U.S., now the credit risk management is becoming truly focused. However, the current financial market liberalization in China is still at the primary stage, and the loans still take the large propitiate of total bank assets. In this light, the credit risk is one of the biggest risks for commercial bank to deal with.The approach of China's reform and opening- up, especially the entrance of WTO accelerating the financial globalization for commercial bank, which in turn makes commercial banks develop considerably fast. But compared to the ?Basel Capital Accord? and credit risk management model in banks of western developed countries, Chinese banks are still in the beginning level. There are some shortages in risk management mechanism, such as the problems in credit structure, credit operating process, credit supporting system and achievement appraisal system. The commercial bank in China has not accomplished operating index of optimizing the relationship of risk and return and increased both the financial and operating risk in commercial bank.This paper undertakes a detailed analysis of credit risk management based on the real examples of credit risk management model of Guangdong Development Bank. It primarily analyzes the current situation of credit risk management in commercial banks and the reason behind problems. Then to apply for the useful practical experience from some advanced foreign banks like American bank and Singapore bank in order to illustrate lessons from them. Finally it concludes with a further and deep study on the aspects of further direction of credit risk management, environment for refining credit risk management, and credit risk management mechanism which will be adaptable to constant financial environment.