Irb Credit Risk Management And Commercial Banking

Currently, credit risk is one of the most important risks confronted by Chinese Commercial banks. Because of the tremendous non-performance asset of Chinese banks and competition from foreign banks after entering WTO, improving our credit risk management becomes an important issue for Chinese bank industry. In developed countries, the establishment of the New Basel Capital Accord, especially the Internal ratings—based approaches(IRB approach) provides a more comprehensive guidance for global bank credit risk management. At the mean while, the new accord and the IRB approach will result in tremendous changes with credit risk management of Chinese banks, both from system and technology. As a result, it is necessary for Chinese banks to learn the experience of credit risk management from foreign banks.The main aim for this paper is to find the way of establishing the credit risk management frame for Chinese banks, with the perspective from IRB approach and Chinese reality.This paper consists of three parts. First part describes the new trend of western theories of credit risk management, which provides the theoretical basis for this paper. This part includes the main credit risk measurement models and IRB approach. Based on the first part, second part analyzes the credit risk management frames of foreign banks, and summarizes the good experience of their credit risk management. Third part discusses how to establish the credit risk management frame for Chinese banks. From the perspective of IRB approach, the paper suggests Chinese banks to build the credit risk management frame with Chinese reality, especially from two sides: system and technology.