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State-owned Commercial Banks To Credit Risk Measurement And Management

Posted on:2005-12-08Degree:MasterType:Thesis
Country:ChinaCandidate:Y Y TuFull Text:PDF
GTID:2206360122494103Subject:World economy
Abstract/Summary:PDF Full Text Request
Banking industry is the most important part of financial system in China. The reform and development of commercial banks is tightly related with the safety of the whole nation economy and people's benefits. By now, the four state-owned banks have held 65% share of the residents deposit market and 56% of the loan market. The significance of state-owned banks in society makes it the key point of the incoming Chinese financial system's reform in 2004 and 2005.The quality of credit assets is the lifeline of commercial banks, which directly influences benefits and safety of banking industry. Nowadays, the profit of state-owned banks still mainly comes from the surplus interest between loans and deposit. So credit loans not only help banks making profit but also bring risks to banks. Banks should improve their risk management ability to prevent and control risks.It has been proved by the development of risk management that credit risk measurement is the demand of internal management and external supervision. Those famous banks in the world are always devoting a lot into the innovating and utilizing the models and skills of risk management. Compared with their foreign rivals, Chinese banks are totally laggards who have just begun to realize the importance of risk management. There is no integrated risk management system in state-owned banks, where traditional ratio analysis and expert experience are dominant method.However, state-owned banks Unfortunately meet more complicated and grievous risks than foreign ones. Economic and financial reform in China has changed the operation circumstances of banks since 1980s. Lots of uncertainty of market economy and credit risks hidden in the planed economy system suddenly become to appearincreasingly, which threaten the stabilization and development of the banks more and more as time goes by. After entry of WTO and opening of Chinese financial market, state-owned banks are taking part in the international competition, facing the financial liberalization and deregulation. At this moment of truth, it is urgent to contrive the strategy of risk management in bank system.This thesis contains four parts. The first part defines the "Credit risk of bank" and introduces the popular techniques and models of credit risk management. The second part focuses on the nature of risks exposed to Chinese state-owned banks. The third part expatiates the conditions of credit risk management in state-owned banks, including internal rating system, control rule and external policy and supervision. In the fourth part, the author puts forward some suggestions on how to improve credit risk management system in state-owned banks, including improving existing credit rating system and using the advantage of Credit Risk+ model to mend the loan risk index; ameliorating the banking organization structure and strengthening internal control rules; improving external supervision efficiency and social credit system.
Keywords/Search Tags:State-owned commercial banks, Credit risk, Risk management, Internal control, Risk measurement
PDF Full Text Request
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