Research On Risk Management Of Shanxi Dratf Bank And The Revelation For China’s Modern Banking Based On It

With the European debt crisis intensified, China’s modern banking industry isalso confronting unprecedented risks and challenges. How to effectively reduce andcontrol risk is an unavoidable problem to every banker. So it’s imperative tostrengthen the study of modern banks’ risk management. We should not abandon theexperiences and lessons left by our ancestors-Shanxi draft bank because it bears thetrick of business-the wisdom of management, as we focus more on learning theadvanced experiences of foreign countries. Based on this point, this paper seeks riskmanagement ideas and methods suitable for China’s national conditions and practiceby analying the risk management of Shanxi draft bank experiences and lessons andcombining with the modern commercial bank risk management practice.Firstly, this paper mines and cards the exchange risk management in Shanxi draftbank of the Qing dynasty and the research achievements about the risk managementof China’s modern bank. In exchange research, scholars respectively propose theirown views on business risk management, financial risk management, personnel riskmanagement, information risk management, supervision and administration, whichpromote the exchange research. But to be regret, although some scholars mention therisk of exchange, they only conduct a case study of the system that is the lack oftheoretical research. In the study of bank risk, scholars comprehensively analyze andsummarize the problems about modern bank risk management in our country fromdifferent respects, and at the same time, they put forward the direction and suggestionabout the modern bank risk management. These studies mainly refer to the successfulconcept on the modern bank risk management from foreign countries and analyzethrough the quantitative model. However, they haven’t deeply studied and applied thewise risk management ideas which are left by the financial big alligator in Shanxidraft bank of Qing dynasty.Secondly, this paper, from five aspects of different, mines and analyzes thesuccessful risk management pattern of Shanxi draft bank and risk managementproblems. The successful risk management pattern of Shanxi draft bank mainly displays in the following aspects: first, in the business control mechanism, itimplements its control mainly through three aspects of control, namely, the exchangebusiness control, credit business control, capital adequacy management. Second, inthe accounting control and risk prevention mechanism, it analyses the success ofShanxi draft bank experience through the exchange account institutional setup andpersonnel, and the establishment of accounting books, exchange rate method andliquidation, exchange accounting risk prevention system; Third, in the informationmanagement and control, it discusses the information management organizationsystem, the current letter format and content, information management and control toillustrate the smooth exchange and strict information management mode; Fourth, inthe personnel management, it analyzes employing mechanism which makes theexchange successful and effective, through the employee selection mechanism,incentive mechanism, and constraint mechanism. Fifth, in the supervision andmanagement mechanism, exchange implements combination of inside and outside ofsupervision and management mechanism: Internal establish gauge, to prevent riskfrom supervision and management;In order to reduce external risks, the tradeadvocates help between exchange and common development At the same time, fromthe credit risk, liquidity risk, strategic risk, political risk and operational risk,the fiveaspects: the Qing dynasty Shanxi draft bank in business in the second half of the riskmanagement problem: Credit risk mainly displays the influence of the Qinggovernment credit to the exchange and the heavy credit of the exchange themselves,light mortgage business mode; Liquidity risk include the following two aspects:Unscrupulously expand lending more and more exposes exchange liquidity defectsand shareholder’s infinite responsibility system adds insult to injury for the exchangeliquidity. For the strategic risk, the shopkeeper of exchange does not break fetters offeudal traditional ideas. They are stubborn and conservative, lack of creative spirit andmiss the opportunity of exchange bank restructuring; Political risk mainly displays inthe domestic situation unrest and the invasion of foreign capitalism. For the operationrisk, the manager seeks for the “the luxury for preciousness” instead of "the waste for beauty" on the threshold of the venture. And exchange lacks effective supervision ofmanagers all over the world.Finally, this paper summarizes the characteristics and experiences of riskmanagement of Shanxi draft bank by using the method of historical comparison,combines with the present situation of China’s modern commercial banks, and putforward suggestions to our modern banking system in five aspects: firstly, it shouldconstruct modern bank culture with Chinese characteristics; secondly, it is to improvethe modern bank governance structure; thirdly, it is to build comprehensive,diversified incentive and supervisive mechanism; fourthly, it should carry on a fullrange of financial innovation positively.