Chinese Commercial Bank Based On Economic Capital Management Risk Evaluation And Countermeasures

After the new Basel capital agreement promulgated and implemented, the riskmanagement of commercial banks mainly around the three pillars of the new Baselcapital agreement initiated, emphasizing the role of capital constraints on risk andestablish a comprehensive risk management philosophy, to strengthen the riskmanagement department independence, establish and improve the corresponding riskmanagement method. Whether the state-owned commercial can further implementthe new standard in the "Basel III" and improve the core competitiveness and meetthe regulatory requirements based on the accumulation of basic data, establishmentof internal rating models and the initial effective by using of economic capitalmanagement are the main objective of its risk management.According to the theory of economic capital management of commercial bankrisk, and the practice of commercial banks use economic capital to manage risk athome and abroad, the paper conducted a more comprehensive discussion ofeconomic capital as the core management of banking risks, and give some evaluationof the effect of economic capital management, and submit the relevantcountermeasures to further strengthen the management of economic capital of thestate-owned commercial banks.Firstly, the paper points out that the economic capital is a kind of virtual capitalto deal with the risk, it is a ruler of the estimated capital required of banks, equal tothe risks value faced by commercial banks, it has an important relation anddifference with book capital and regulatory capital. Therefore, commercial banksmust be comprehensive and accurate measurement of economic capital. The articledescribes the economic capital measurement methods of credit risk, market risk andoperational risk.Secondly, the article discussed the problem of commercial banks use economiccapital to manage the Portfolio risk. The paper argues that as a measure of volatilityunified tool, economic capital not only established the link between risky assets andcapital, but also established a connection of additives and comparable betweendifferent risks, it was used in portfolio risk management, and was used to measurethe overall risk of bank.The article adequately evaluated the effect of economic capital management inboth domestic and foreign banks. In western commercial banks, they achievedsignificant result of use economic capital to control risk, but in the meanwhile, they are also confronted with some new problems. By comparison, in domestic banks,after introduced the economic capital into operational management, it plays a largerole of promote the standard of elaborate risk management, so, economic capitalhave been took much count of policymaking in domestic banks gradually. However,it still exists disparity with the foreign banks in developed countries.Finally, on the basis of the above research, the paper proposed severalcountermeasures for state-owned commercial bank application of economic capitalto manage risk, and seeks to the countermeasure have certain maneuverability.