Credit Risk Measure Based On The Kmv Model Of A Single Domestic Factoring Business

With the continuous development of the economy, trade has been expanding, and factoring then came to the fore. China's banks have begun to set foot on in 1987. However, the domestic business is not fully carried out until 2002, and in the period of just a few years, it has been rapidly expanding. This makes the banking take an approach to measurement and management their risks when they face the profit opportunities. Among the various risks we should concern the credit risk first. We generally use financial indicators to measure credit risk of factoring. However, western developed countries wide spread use quantitative analysis.So firstly, through the comparison of several internationally recognized advanced credit risk measurement model, the paper combine with the actual situation of China and get a conclusion that KMV model is more applicable than other models in China. Secondly this paper use three examples of trade to make empirical research.Known of the debtor accounts are returned on time, the paper use KMV model to measure their default. Measurement results show that the probability of default and breach of contract in the distance calculated by this model both above the industry average. This suggests that the usage of KMV credit risk measurement model in domestic factoring business is valid and it can accurately reflect the ability of debtors who repay their due loans. However, in order to control the credit risk of domestic factoring business, we should not only carry out a quantitative analysis of default risk, but also use professionals and improved information processing systems, enhance customer choice and follow-up care management.