City Commercial Banks In Sme Credit Risk Research

The city commercial banks in China are regional bank corporations, developed by the urban credit cooperations. Due to the small sizes, the city commercial banks have flexibility that those large nationwide commercial banks do not own. Since incorporated, the city commercial banks, based on their cooperation characteristics and capital strength, have set small and medium-sized enterprises (SME) their target customers, and have advanced the strategic direction, namely"base on local regions to serve the SME". Despite the huge credit financing demand and considerable risk of the SME, the city commercial banks cannot adopt"loan parsimony"strategy like state-owned commercial banks to avoid the risk by large enterprises. Therefore, the issues concerning SME loan risk and risk control have become the key points in the city commercial banks'credit loan management.This paper analyses the current credit risk control techniques and new theories, and put forward a set of feasible credit risk analysis and control approaches based on the present situation of the city commercial banks and the SME characteristics.This paper adopts factor analysis and stepwise discriminant analysis, based on financial and non-financial factors, to build the SME credit assessment indicator system whereby this paper builds the LDA model and logit model. Finally this paper empirically tests these models using relating data. The empirical results show that using the above indicator system to evaluate the SME credit risk, the LDA model is better than logit model.