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The Establishment And Improvement Of Credit Rating System For Commercial Banks To Corporate Customers

Posted on:2006-07-12Degree:MasterType:Thesis
Country:ChinaCandidate:P WangFull Text:PDF
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At present, our country is going through the transition from the traditional economy to market-oriented economy. The credit absence in the economic field has not only deteriorated the condition of business, debased the quality of banks' assets but also increased economic cost of the whole society. Credit risk has been the primary inducement to financial crisis. It is absolutely necessary for the commercial banks to make credit rating in the aspect of client relationship management and business development. As an indicator to the credit strength of enterprises, credit rating integrates the professional competences such as macro-economy analysis, industry analysis, competition analysis, financial analysis and business prospects. It synthesizes the characters of both quantification and qualification. It is important to the commercial banks in the aspects of risk management, product pricing and capital allocation. Internal Ratings-Based Approach (IRB) became one of the central contents in the New Capital Agreement Draft which was proclaimed by Basel Committee in 2001. There are some difficulties in the application of the Internal Ratings-Based Approach (IRB) in consideration of our banking status quo. So we can perfect the credit rating system step by step by borrowing the experiences from the western countries. In this guidance the overall balance score model is designed for credit rating of the business clients in a way of combining the demonstration analysis and the specification analysis. The index system of the overall balance score model is more specific and particular than the current clients rating models of banks. It has at least four layers in long direction and nine dimensionalities in cross direction, especially for the examination of the macro- environment and industry in which the enterprises stand. It meets the index requirement of Internal Rating System in the Agreement of Basel. To achieve the maximum objectivity there is unified standard in the setup of all index weight numbers in the computational method. Meanwhile, more market research indexes and internal research indexes are added into this model, which is helpful to get a more true and comprehensiveappraisement for the enterprises. Besides, this model gives emphasis to the development and change of enterprises. To lay stress on the future of enterprises not the current financial status is a predominant idea for the overall balance score model in credit rating. Finally, the model is demonstrated with the example of Dalian Merro Pharmaceutical Co., LTD. However, the original intention of the model design is not used for the loan decision- making, but for a more comprehensive understand of the banks' clients in order to make a series of decisions. So in the practical application the commercial banks have to set up panel of experts to make uniform design on the basis of practical situation and the requirement of the credit management. And to achieve more vitality and reliability, it is necessary to make terminal or non-terminal adjustment according to the following surveillance and feedback situation. Some adjustments are also essential on the basis of value orientation standard in operation and the influence of some special factors in the process of credit rating.
Keywords/Search Tags:commercial bank, credit rating, credit risk
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