China's Commercial Banks To Credit Risk Management Of Long-term Mechanism Design

Credit risk management is one of the essential abilites in the running and development of a commercial bank. Being a major resource of income for Chinese commercial banks, credit risk is accompanied by substantial risks as well. There is a considerable gap between the credit risk management in Chinese commercial banks and those of western countries both in prevailing concepts and in their techniques, methods and organization construction in use. In current social, environmental and legal circumstances, Chinese commercial banks are greatly limited in their power to change their exterior conditions. Therefore, it is more practical and crucial for these commercial banks to combine the literal conditions with the successful experience and techniques of western commercial banks in credit risk management, thereby perfecting our inner credit risk management mechanism, improving their power and competitiveness in the market.With a great number of years relevant experience and a careful study of the actual conditions of many Chinese commercial banks, the author approaches the situation of credit risk management in China from its interior causes and connotation. By adopting the advanced risk management mechanism in western commercial banks, the author analyzes the existent problems and challenges in Chinese banks, and brings forth proposals for persistent effect mechanism in risk management, including an operating mechanism of risk management, the evaluation, control and assessment of risks, and cultural assurance. Of these three parts, the part of the evaluation, control and conduction of risks is given prominent emphasis with the help of advanced modern risk management techniques. Finally, a case study of a commercial bank is used to illustrate the application of the theories discussed earlier in the paper, and the risk management mechanism of this bank is evaluated and suggestions for improvement are relayed, reflected the persistent effect mechanism preliminary practice.