Study Of Commercial Banks In The Credit Markets Credit Risk Control Methods

This paper aims at the control of credit risk for commercial bank and further to guide in real practice in order to lower credit risk of commercial bank.Credit risk is one of the main risks that the commercial banks face in everyday operation. It includes credit risk caused by credit rank degraded due to objective causes as well as by borrower's default subjectively. Based on the formation of credit risk several effective methods of control has been pointed out including credit rationing, credit asset securization and credit contract. First credit resource can't be collocated effectively in a free credit market because equilibrium of supply and demand can't be achieved with freely fluctuating rate. The rate is recognizable and encouraging only in the non-clear-out market under the control of bank, so as to collocate the credit resources rationally. Second asset securization is a new financing tool raised in the recent decades. Due to its structural trait it can be used in the control of risk and transfer it to other entities. Third credit contract can also be fully used for commercial bank credit risk control. Take mortgage for example, it can reduces the losses under the circumstances of borrower's default so as to rule out the risk lovers. Meanwhile mortgage can be used as a screening device. From this point of view we can design a kind of contract which encourages and restricts the debtors at the same time in order to reduce the credit risk furthest for commercial bank.It is the first time to discuss the control of credit risk within the framework of credit rationing, asset securization and credit contract, which is an innovation of this paper. Suggestions are also pointed out respectively at the end of each part. It is hoped that these methods will be applied in real practice.