China's Commercial Banks Credit Risk Management Study

Credit risk is the major risk that Chinese merchant banks face and is the main factor of Chinese financial risk at present. How to raise the level of credit risk management is an important task of Chinese merchant banks and is one of the hot topics in academic circles. Under the guidance of the New Basel Capital Accord, adopting qualitative and quantitative methods of study, this thesis thoroughly discusses the credit risk management problems of Chinese merchant banks.The thesis begins with the introduction of theories in credit risk management. Based on the analysis of credit risk's economic aftereffects, it puts forward the target and principles of credit risk management, and introduces the process and technology of credit risk management. Secondly, it outlines the current situation of Chinese merchant banks' credit risk management and discusses factors which lead to the serious credit risk in Chinese merchant banks and existing problems which need to be solved in the credit risk management. Lastly, it puts forward countermeasures to solve these problems: adopting credit risk measurement technique, applying credit risk management strategies and establishing and perfecting the credit risk prevention system. In the part of adopting credit risk measurement technique, the thesis analyzes the connotation, function and significance of credit risk measurement, summarizes the principium of credit risk measurement, discusses the applicability of popular credit risk measurement models in Chinese merchant banks and puts forward the assume of designing Chinese own credit risk measurement model. In applying credit risk management strategies, the thesis summarizes the principium of credit risk management strategies, outlines the present situation of adopting credit risk management strategies and discusses how to apply the credit risk management strategies in Chinese merchant banks. In establishing and perfecting the credit risk prevention system, the thesis puts forward the preventive measures of establishing and perfecting the system of preventing credit risk from three aspects e.g. internal control, external supervision and external dealing systems.The thesis draws conclusions as follows:The formation and accumulative effect of credit risk in Chinese merchant is not only due to the influence of general credit risk factors but also due to profound and unique institutional factors, such as faulty property right, information asymmetry between banks and companies, companies' over-liabilities and the soft sanction of creditor's rights. However, the major issues in the credit risk management of Chinese merchant banks are the backwardness of credit risk identification andmeasurement technique, the absence of credit risk management strategies and faulty credit risk prevention system. The key to improving credit risk identification and measurement technique is to apply the credit risk measurement models. But the popular credit riskx measurement models are not workable for Chinese merchant banks, so we should develop our own models. The absence of indispensable measures in dealing with the credit risk makes Chinese merchant banks passively face to the risk instead of decentralizing and avoiding the risk by assets realignment or adopting certain financial tools and causes credit risk accumulation. So, in the credit risk management, we should advocate the much more use of assets decentralization, credit risk's compensation and guarantee, and credit risk's counteraction and transfer. Preventing credit risk is a complicated engineering system. In order to establish and perfect the credit risk prevention system, we should enhance the cooperation between merchant banks, government, supervision departments and other social forces.