Research For Credit Risk Of The Real Estate In Commercial Bank Of China

This thesis, based on the current situation of real state market, mainly analyzes the credit risk in real state market, The main analysis is based on a rational perspective, aiming to provide personal recommendations on credit in commercial banks of China. This thesis divides the credit structure of commercial banks into two parts:credit in real estate industry and credit in non-real estate industry. With this kind of division, the real estate industry can stand alone and avoid the complicated division with other industries, which can be regarded as a typical feature of this thesis. Another feature is its focus on all the real estate industry, which includes not only the analysis on the credit risk of real estate developers, but also a study on the risk of individual housing loans in commercial banks of China. This thesis gathers up different loans as a correlative group, aiming to foresee the overall influence of commercial banks when the real estate industry changes. The main research methods of this thesis include qualitative analysis, share option pattern, game theory and quantitative analysis.Standing on the side of commercial banks, this thesis firstly divides the credit structure of commercial banks into two parts:credit in real estate industry and credit in non-real estate industry. This paper is divided into four parts; the first part is about the status of the real estate market. The current situation of real estate industry and the proportion of its total value in GDP have explicably shown its significance in economic construction of China. Based on the statistics of previous years, this thesis make a thorough study on the capital sources of real estate industry and the constitution of credit funds in commercial banks, which shows real estate industry's heavy dependence on commercial banks, as well as commercial banks to the real estate industry. In this way, the interdependence, correlativeness, and interrelationship between real estate industry and commercial banks are shown thoroughly, which means that crisis from one side would result great lose in the other side. With the research on the official data of individual housing loans, this thesis finds out the rising trend of individual loans in commercial banks, and shows commercial banks'credit support to the whole real estate industry. Under such an economic condition, the current real estate market is in the period of high housing price, and faces influences of macro-control. All the factors mentioned above would exert an influence on the real estate market.The second part is through the comparison between the real estate market before the subprime crisis and the current situation in China, this thesis lists their similarities, such as the continuous rising house price, the high frequent appearance of macro-control policy. This comparative analysis has provided a clearer understanding on the real estate market in China, which can usefully prevent the turning up of crisis in this field.The most important part of this thesis is to use models and theories to discuss the credit risk in real estate industry. From the theoretical angel, the credit risk in real estate industry includes systematic risk and nonsystematic risk. In consideration of the uncontrollability of systematic risk, this thesis focuses on the demonstrations of rational default risk in nonsystematic risk. The rational defaulting behavior is related to the analysis of Hypothesis of Economic Man, and so do the option theory and the game theory. This thesis then applies the game theory to analyze the rational default risk of individual housing loan, and finds out that banks would issue their loans after estimating individual credit standing. In other words, the estimation of the probability of individual's good credit standing would influence banks' loans on individual lending. Furthermore, the probability of individual's good credit standing is decided by individuals who could provide more information on personal credit standing, thus the individual credit system should be greatly maturated.Based on what has been found out in this thesis, the last part is about suggestions on how to prevent credit risk in Chinese commercial banks. First, China's commercial banks in order to control risk, should try to expand the scope of investment, investment in different industries. Various sectors of investment or credit risk exists, the difference is big and small. Therefore, in order to reduce the overall risk of commercial banks, commercial banks in China need to adjust the credit structure. Commercial banks should reduce the risk to support industries such as new energy, high-tech industry. The real estate industry is the regulation of the object, so the risk is too large, commercial banks should reduce their credit capital of the real estate industry. Secondly, commercial banks in China should take various measures to reduce the credit risk of the real estate industry.