On The Management Of Credit Risks Of Commercial Banks In China

the reason why the author chooses the thesisThe thesis of this paper is "Research on the Credit Risk of the Commercial Bank in China". The choice of the thesis is mainly based on the following three considerations. First of all, the author keenly feel that the existing literature on the research of the credit risk of the commercial bank in China is abundant but not fruitful, most of which at best constitutes only a simple description of the phenomenon and list of propositions. In view of the urgent need for the advance of reform in the financial sector, theoretical breakthrough is keenly needed. The author ventures to take the opportunity to do some research in this field in an effort to provide a new perspective and introduce some new idea. The second aim of the author's choice is to provide a preliminary solution to the problem of credit risk and unhealthy assets in the commercial bank system. The tough job of tackling the problem has, for some time, been the focus in the theoretical and decision-making circle. The result, however, is far from being satisfactory as noted above. The final reason of the author's choice is associated withhis personal experience---he has accumulated much material and takesstrong interest in the solution of the problem. the methods the author uses in this paperIn the research of credit risk and unhealthy assets of the commercial bank in China, the author holds that a systematic approach should be adopted for the proper analysis and probing. Moreover, the unique characteristic of China in the reform process should be taken into account when analyzing economic problems. In this paper, the author made the greatest effort to address the issue in a macroeconomic perspective with consideration also given to the behavior of micro-agents. Qualitative as well as quantitative analysis is taken in the paper. To be specific, in the analysis of the mechanism of the formation of the unhealthy assets and credit risk, a simple regression model was used to estimate the quantitative relation between disposable income and deposit of the residents in China. The result of the estimation confirms the high correlation of the two economic variables. the organization, view point and conclusion of this paperThe organization of the paper is as the following. In the first chapter, the author made a brief retrospection of the financial disturbance in East Asia, the causes of which is attributed to the upsurge of the bubble economy, the relaxed regulation governing the loan provision, the over-rapid opening of the capital market and the inefficient supervision by the central bank. In view of the similarity between the underlying causes leading to the financial disturbance in East Asia and the current situation in the financialsector in China, the author made a preliminary analysis of the possibility of the outbreak of financial crisis in China. In the second chapter, the author reviews the development of the credit crisis management both theoretically and practically in China. The author divides the process into two stages: the first stage is from 1980s, which isthc preliminary probe for the credit crisis management in China; the second stage is from 1990s, which is the practice of the credit crisis management of Chinese commercial bank caused by the financial reform. In the third chapter, the author mainly concentrates on the mechanism of the formation of credit risk and unhealthy assets. Proceeding with the introduction of the changed pattern of the capital allocation in China, the author points out that a series phenomenon is closely related ---such as the relatively declining strength of the treasury department, the drastic increase in the capital-collecting potential of the banking system, the deepening and expansion of the financial activity and corresponding increase of the personal income in the whole national economy. It is the very change of capital allocation pattern that leads to the sudden increase in credit risk and the amount of unhealthy assets. Because in the old highly ce...