Study On Regulations And Supervisions Of Banking Credit Risk In The View Of Information Asymmetry

As one of the main factor of liquidity crisis in banks, credit risk has existed from bank coming into the world, which can result in bad assets and territorial or global crisis. For the long-lasting and healthy development of banks, strengthening the regulations and supervisions on credit risk is one of the most important problems which China's commercial banks have to face.The regulations and supervisions on credit risk started late and some problems such as weak foundation and delayed development exist now. Credit risk rooted in the uncertainty of credit activities is a main kind of financial risk in the long run.The widespread information asymmetry is the main factor of credit risk, which can cause adverse selection and moral hazard in transaction. So, this thesis analyzes the historical evolution, current situation and existing defect in regulations and supervisions on the banking credit risk in the view of information asymmetry and proposes some relevant recommendations and solutions.Chapter one of the paper introduces the research background and purpose of the subject, and overviews the theory development of regulations and supervisions on commercial credit risk in the view of information asymmetry. Chapter two analyses how the information asymmetry causes market failure and influences the banking regulations and supervisions from the point of view of uncertainty of credit activities and formation mechanism of credit risk. Chapter three is a brief summary of China's banking credit risk supervision's history and current condition. Chapter four discusses the relationship between information asymmetry and credit risk regulations and supervisions in theory by using the game matrix. Chapter five is the conclusion part of this paper offering some tentative channels to improve china's banking credit risk regulations and supervisions.This paper analyses formation mechanism of commercial banks'credit risk and uncertainty of credit activities in the view of information asymmetry, and by means of game model some measures are proposed in the system construction and other aspects.