Research On The Risks Of China’s Commercial Bank’s Financial Products

Since2010, due to the increasing macroeconomic regulation of real estate market and the slumping stock market, investors began to shift attention to bank financial products that were not much involved previously. In response to this situation, domestic commercial banks start to put emphasis on the business of financial products. Diversified financial products have emerged, and they have achieved unprecedented selling performance in the last two years. However, because of China’s short history in financial products service, as well as the lack of a systematic study of related theories and the shortage of authoritative definition of the operating mechanism of different financial products, Chinese commercial banks are facing a highly uncertain risk. As early as in2008after the U.S. subprime mortgage crisis, many European and American commercial banks started to evaluate the safety of operating mechanism and the quality of underlying assets. Therefore, in addition to pursuing a rapid development, Chinese commercial banks should pay more attention to the security and creativity of the operating mechanism of financial products. Particularly they should conduct systematic study on how to effectively reduce investors’ risk without sacrificing assured returns. This would be a milestone for our financial products service to transit from adolescence to maturity.This paper contains the following several aspects:The first chapter discusses the background and the significance of the topic. The method and value of the research is summarized followed by the analysis of latest research advances in such an area.The second chapter deals with related concepts of the financial products. Starting from the definition, this chapter concentrates on the categorization of financial products according to their profitability and whether they are structured. A discussion on trust products is also covered. Base on this, a systematic study of financial products service of domestic commercial banks is carried out.Chapter three reviews the history of Chinese commercial banks’financial products, following which the operating mechanism for three different types of financial products are discussed. The possible risk in the operating process is pointed out.As the core of the paper, the fourth chapter uses Markowitz Model to analyze the risk of financial products service from varied aspects, including regulatory process, product design, market operating, investors, etc.In addition to the risk analysis listed above, the fifth chapter is featured by constructive suggestions on the risk control of financial products service in terms of three different levels: policy, regulation, and organization.With the increasing development of financial markets, individual financial service in China is quite promising. It has become an indispensible source of profits for major commercial banks. Through an examination on the risk and operating mechanism of financial products, this paper is aims at guiding domestic investors for more reasonable judgment, as well as providing theoretical support for the development of Chinese commercial banks’individual financial service.