Sme Credit Risk Evaluation

Mid&Small-Caps (Medium&Small-sized Enterprises), as the most energetic and vigorous group in market economy, have been one of the important motivations for the growth of economy in China By the end of 2006, the number of Mid&Small-Caps has reached 12 million, which accounts for 99.5% of all enterprises in China. Meanwhile, Mid&Small-Caps create 58% of China GDP, pay up 48% of tax and provide 25% opportunities of all jobs available. Mid&Small-Caps have played an important role in product technology innovation, industry structure readjustment, regional economy rise and especially in releasing working pressure and transferring country working force, which makes Mid&Small-Caps the leading entities and factors in driving the constant and rapid growth of economy in China. To maintain rapid growth, it is far from enough for Mid&Small Caps to raise money only depending on self accumulation. They have to take advantage of outside finance channels among which bank loans are the main sources. But it is a common phenomenon that most of Mid&Small Caps are impossible to get loans from banks. Because of unpredicted operation and credit risk Mid&Small Caps normally having which leads to high management costs for banks, banks are "afraid" or "stingy" of granting loans to Mid&Small Caps. How to solve the difficulties Mid&Small-Caps facing and meanwhile keep the safety of credit assets of banks to the maximum extent? Based on above considerations, the author chooses Mid&Small-Caps credit risk control as the thesis' topic.There are five parts in the thesis:The first part is a brief introduction of credit risk theories. From the view of economics, this part analyzes the objective existence of credit risk and points out that it is the core management capability for commercial banks to control credit risk effectively during whole process.The second part mainly takes BankA as an example analyzing specific credit risk of Mid&Small-Caps and the characteristics of it. This part analyzes the credit risk characteristics of Mid&Small-Caps and the features and reasons of banks controlling the credit risk of Mid&Small-Caps. Then drawing forth the topic of the thesis, because of the difficulties evaluating the risk of Mid&Small-Caps, the thesis designs a set of credit risk evaluation system suitable for Mid&Small-Caps.The third part constructs the credit risk evaluation system. This part mainly introduces the credit system frame of BankA for Large-Caps, analyzes the principles that should be followed when establishing credit evaluation system and designs the evaluation index and methods for Mid&Small-Caps.The fourth part does diagnosis analysis for the credit evaluation system designed for Mid&Small-Caps.The last part is some suggestions on strengthening credit risk control for Mid&Small-Caps.