The Research On Credit Risk For Chinese Commercial Bank

The prosperity of financial market has become an essential sign of the development of modern economy. In this large and sophisticated area, as one of the indispensable parts of the whole financial system, business bank not only acts as a media among the financial organizations but also reflects the operation of national economy. Credit risk is one of the most important risks faced by modern business banks in their daily management activities, as reflected in the sub-premium mortgage crisis which happened in America lasting from 2007 to 2008. With the integration of global economy, the academia and financial organizations become more aware of the importance of credit risk management for business banks. Meanwhile, the environment of international financial market being greatly improved and products derived from credit being highly developed which have endowed the credit risk management with deeper meaning, making it the most challenging topic in nowadays financial area. Nevertheless, we should also be clear about the current situation in our country. As a result of both historical and systematical reasons, the technology of credit risk management for business banks at home is relatively backward. As our national financial market becomes more open and the marketization of interest rate and exchange rate develops faster, the defects in credit risk management for business banks begin to come into view. It is under this background that this paper develops its further study, devoted to search out a route for credit risk management according to our national conditions, which will contribute a lot to the improvement of credit risk management skills for business banks in our country on the whole.This paper has been divided into five chapters. The first chapter will mainly talk about the significance and purpose of choosing this topic and the current studies at home and abroad. The second chapter will give a brief summary of credit risk including its definition, causes, characteristics and the basics concerning the calculation of credit risk. In the third chapter, this paper will introduce the theories of credit risk management for modern business banks, involving the request for credit risk calculation raised in Basel Agreement which has been recently published in 2010. Besides, the models of credit risk management adopted by international leading business banks will be explained and a comparison among these models will also be made. This paper will adopt KMV model to demonstrate its study. In the forth chapter, this paper will focus on the problems existed in the credit risk management for business banks in our country and their causes. The final chapter will introduce the methods concerning how to improve our national system of credit risk management for business banks.