A Study On Personal Loan Risk Management Of Commericial Bank

Since China’s economic reform and opening up in1980s, the demand for funds has beengrowing and China’s commercial bank hence gradually introduced business in personal credit,which rapidly developed in the early21st century. After China accessed to WTO, financialsector in China is much more open and competitive. Personal credit business has become animportant part of profit growth of commercial banks and a strategic development position ofmost financial institutes.Due to the lasts start of personal credit in China, risk management of such business isfragile, which makes the risk management study of such business is particularly important toChina’s commercial banks, especially after the banks experiencing the Asian financial crisis in1997, the U.S. subprime mortgage crisis in2007and nowadays’ ever strengthening stateregulation of real estate market.This paper, using Operation Department of Agricultural Bank of China GuangdongBranch as subject, probes into the problems of personal credit risk management and theircauses, then uses multinomial Logistic regression model, with the help of SPSS software,conducts empirical tests of the bank’s personal credit risk. Combining the tests result withactual situations, this paper then put forward policy suggestions such as build a sound internalmanagement system, improve personal credit center, centralize operation and management ofpersonal credit business and set up personal credit risk management early warningmechanism, to improve personal credit risk management performance of OperationDepartment of ABC Guangdong Branch.This article is divided into seven chapters: Chapter I, Introduction, presents thebackground to the study, raised the key issues of the study, points out the purpose andsignificance of this study, introduces the research trends domestic and abroad and putsforward the mind map and mythology of this research. Chapter II is about personal credit riskand its relevant theories. This chapter introduces the history and development of personal credit business, the classification and causes of personal credit risk, the process of personalcredit risk management and relevant theories of personal credit risk management. Chapter IIIpresents the status quo, the problems and the causes of problems of the operation departmentof Agricultural Bank of China Guangdong Branch. This chapter mainly presents the overviewof the bank, the development of the bank’s personal credit business, the bank’s past cases, riskmanagement measures taken by the bank and its problems and causes of personal credit riskmanagement. Chapter IV gives an empirical test in personal credit risk management of theoperation department of Agricultural Bank of China Guangdong Branch, basing on the SPSSmultinomial logistic regression model. Chapter V takes the reference of personal credit riskmanagement of commercial banks aboard, describes the experiences in managing personalcredit risk from banks both at home and aboard. Chapter VI provides policy advices to subjectbank to improve risk management performance in personal credit business. Chapter VII isconclusions and discussion.