China's Commercial Banks Operational Risks Early Warning Research

In the transition of economic system and structure of our country, and in the course of financial development and reform, the operating risk problem of banking is outstanding day by day too. In recent years, the bankruptcy of Hainan Development Bank and some non-banking financial institution have already sent out alarm for us. So, analyzing the characteristic of the operating risk of commercial banks and setting up the risk early warning model, will have important meanings.The content of chapter one analyses the study of domestic and foreign literatures, and points out some deficiencies such as too much relations between indexes, partially risk analysis, the weight distribution hardly depend on subjectivity and so on. The second part analyses the meaning, characteristics and causes of the commercial banks' operating risk. Then it makes further analysis to the operating risk from the aspects of asset, mobility, capital and profitability. The third part sets up the early warning index system through the analysis of R cluster. And the new system with 10 indexes can represent much of the information the original system has which is tested by Q cluster. The fourth part sets up the early warning model of commercial banks' operating risk, which is based on the fuzzy comprehensive appraisal and the principal component analysis. When distributing weight, it draws the information of all the components by the principal component analysis. And when confirming subject function, it judges the risk level by the use of ladder method. The fifth part makes a early warning of Shantou Development Bank which took place of crisis in July of 1999.The main characteristic and innovation of this paper lies in four aspects. Firstly, the index system has the characteristic of being in line with international standards, succinct, easy to collect, which can make the early warning system integrate with the international practice and improve the efficiency of analysis. Secondly, having the idea of overall risk management, it considers the aspects of asset, mobility, capital and profitability. So that it can make up the defect in the existing systems, which only focus on the credit risk or mobility risk, and it can consider the influencing among each risk factor. Thirdly, on the basis of preserving most index information, it takes use of R cluster analysis to delete the relations among indexes, which resolves the problem of heavy correlations among indexes and makes the risk analysis more efficiently. Fourthly, it sets up the risk early warning model based on the fuzzy comprehensive appraisal and the principal component analysis. Which makes the weight of the index reflect its contribution to the risk more objectively. And which have solved the problem that the risk appraisal is too single, and too absolute. So that it that can reflect the true state of risk objectively.