Market Risk Management Theory And Its Fund Management Business Of Commercial Banks In China

From 1970s',the emergence of financial derivatives aggravated the turbulence of international financial market. Increasing market risk led to the concerns of international financial field. As the representatives, The Basle Committee and other international organizations have done a lot of jobs on this topic. With the continuous exploring and practice, developed countries have established a set of scientific market risk management system. They pointed out that risk management entails the time-honored task of getting the right information, in the right format, to the right people, at the right time. The ultimate objective of risk management is to improve income turbulence management by diversifying and hedging, to improve resource deployment by analyzing the risk and return, to assist the management and decision, to obtain the reputation of good risk management for the bank.Up to now, we have not had any rules and operations in market risk management, which does not conform to our financial reform, opening step and the status in the international financial market. Because of this, commercial banks in China made losses in international market. Meanwhile,it obstructed the opening steps of our domestic financial market . In that way, what kind of market risks our commercial banks face, what present situation of the management on market risks of commercial banks, how developed market risk management experiences can help strengthening our commercial banks' market risk management. The thesis is trying to make studies in these areas.The thesis is divided into three parts:Part Ⅰintroduces the definitions and characteristics of financial market, risk, financial risk and market risk, then explains the correlation among them. And analyzes financial risks according toe the category of Basle Committee. On the basis of these, describes the market risk and the causes of different kinds of financial products. At last, gives examples to illustrate the harmfulness and necessary of market risk management.Part Ⅱ introduces the scientific risk management methods of international financial fields. At first, it recalls the brief history of market risk management, then it presents the market risk management framework of Basle Committee. Because of the important position of quantification in market risk management, it is explained in detail which includes the most popular risk management methods such as value-at-risk, stress testing and condition analysis. At the last of this part, it raises several market risk management methods on foreign exchange market, interest rate market, commodities' market and equity market.Part Ⅲ is based on the past two parts, it emphatically analyzes the market risk which our commercial banks face and current situation of market risk management, points out because the management levels lack the knowledge of international financial markets and risk awareness, they cannot understand market risk correctly. At the same time, central bank is short of the administrations on market risks that made the vacuum of market risk management and losses in the markets. Some suggestions were put forward for promoting market risk management level for our domestic commercial banks.