Research On The Risk Assessment Indicators Of China’s Banking Industry Based On The FSAP Framework

In China’s current financial system, banking industry still holds the most importantposition and plays the basic role of financial resources allocation. Therefore, the stabilityof the banking system is related to the stability of the financial system andmacro-economic health development, the research of the bank for maintaining stableoperation in theory and practice also has the vital role. The risk assessment of theCommercial bank, as the first threshold to timely discover and early warning of therisks of the bank, has provided the reliable basis for precautionary and disposal of bankrisk. This paper is based on the international universal FSAP bank risk assessmentframework, using the scientific index of bank risk assessment, and combined with thereal history data that is more than ten years to Chinese banking development process, acomprehensive analysis of various kinds of risks that exist in the system of China’sbanking industry, through the quantitative and qualitative analysis, and finally putforward to the reasonable suggestions and countermeasures for improving Chinesecommercial bank’s development. The main content framework includes the followingfive parts:The first part is the introduction. This part points out Why to estimate the risk ofChina’s banking industry from the point of view of financial stability, mainly introducesthe background, significance of the selection, research ideas and research methods, andsummarizes the innovation points and the insufficiency, making clear the researchdirection through reading the related literature at home and abroad.The second part is the brief introduction of banking risk assessment system. Firstly,recalling the course of development of the Basel Capital Accord, including the proposalof Basel I, the transition of Basel II and the emerging of Basel III, and reflecting on theevolution and impact of the Basel Capital Accord from the practice of the Chinesebanking industry risk assessment. Secondly, highlight the establish, the evaluationframework, assessment and evaluation methods of the FSAP risk assessment system, andfinally exploring the FSAP assessment system from the development process inaccordance with the time context.The third part introduces the analysis indicators based on the FSAP framework of the banking risk assessment. This part assessed all kinds of risk factors that thecommercial banks are facing from the core set indicators and encouraged set index,which can be divided into six specific parts, including capital adequacy indicator analysis,asset quality indicators analysis, liquidity indicators analysis, profitability indicatorsanalysis, market risk sensitive indicators analysis and encouraged set index analysis.The fourth part is empirical research on the banking risk assessment indicatorsbased on the FSAP framework. Firstly, based on the macroeconomic data and bank dataamong financial steady index set, bank risk assessment of the multivariate logit model isbuilt, including introduction of the model background, variable selection, selection andprocessing of the sample and data; Secondly, which is also the key part of this paper,carrying out empirical analysis and qualitative discussion based on the model; Finally,making a summary for the empirical analysis process of evaluation.The fifth part, also the last part, is to perfect the banking risk assessment indicatorsof countermeasures. According to the results of empirical analysis and index evaluation,putting forward the feasible suggestion and opinion for our china’s banking riskassessment and maintaining the future stability of financial system. The part mainlycovers two major aspects of assessment and supervision, which respectively arecontinuing to strengthen the supervision of banking risk factor and constantly improvingthe assessment of banking performance factor. The part involves strengthening thesupervision of the capital adequacy ratio, maintaining a reasonable income level of thebanking industry, concerning about the non-performing loan rate fluctuations, trackingthe trend of the liquidity ratio, maintaining banking sensitivity to market risk and someother suggestions.