Research On Stress-testing Of China’s Small And Medium Commercial Banks

The living environment of domestic enterprises is very bad in2011, China’s economy experienced a series of crises, for example, deterioration of external economic situation, domestic inflation, the real estate bubble, the crisis of local financing platform. China’s financial industry operating at increased risk, especially small and medium commercial banks faced with greater potential risk, because of the weak ability to resist risks. This paper based on the widely used WILSON pressure test model, the variable included the feedback factor, formed the improved WILSON model. At the same time, the credit risk stress tests of10samples of small and medium commercial banks were conduct to predict their performance when they faced with the extreme adverse scenario. Through the analysis of the stress testing results, it found the difficulties encountered in the stress testing practices of China’s small and medium commercial banks. After that, it summarized the common problems and deficiencies in stress test of China’s small and medium commercial banks. Finally, it put forward some suggestions for better use of stress tests and promotion of their development.