The Analysis And Precaution Of Credit Risks On Real Estate Develpoment Loan In Commercial Banks

China’s real estate market has experienced a rapid development in the past two decades, andit has gradually become a new growth point of Chinese National Economy. The development ofreal estate businesses needs huge amount of funds because of its capital-dense character. Theshortage of China’s real estate financing channels makes the situation that vast majority of creditloans come from commercial banks. The exploitation loans are risk-concentrated, and thecollateral values fluctuated much, which brings commercial banks great credit risk. Once theborrower (the estate corporations) defaults, commercial banks will take serious losses. Added thecredit risk is the most significant part among all risk classifications, strengthening the research onthe management of real estate development loan risks, brings benefits not only to commercialbanks for raising loan quality, but also to Chinese Real Estate Market with a more healthy andsteady development.This article follow this idea,"the introduction of development loans–the factor analysis ofcredit risk in development loans-measurement methods of development loans credit risk-precaution and control of credit risk in development loans", with integrated use of qualitativeanalysis, quantitative analysis method, game theory, empirical analysis and other analysis methods,we are able to analyze the credit risk in commercial bank real estate development loans.Real estate development loans mainly refers a medium-and long-term project loans, andcommercial banks open to the real estate development enterprises, for housing, commercialhousing and other real estate development and construction. It has the characteristics ofconcentrated-credit risks, lacking of sources on repayment channels, instability of collateral value.Therefore, before issuing loans for real estate development, commercial banks need to go throughthe project, submit a validated procedure, and concerned about the loans after regulators.This article mainly analyses the causes of the credit risk of loan from two aspects: the macrolevel and micro level. Macroeconomic factors leads of credit risk are mainly two causes: the firstcause is the risk of macroscopic policy change, including interest rate policy change, the credit policy changes, and real estate tax policy changes. And the second is the risk of economic cycle.Development loan cycle and macroeconomic cycles have a great correlation between changes inthe macro-economic cycle, which will have a huge impact on development loans. The mainfactors cause the micro level risks are major adverse selection and moral hazard. The adverseselection behavior will lead to the effects on adverse selection, loans rates of adverse selectioneffect and the adverse selection effect of mortgage loans. Moral hazard mainly includes: changethe use of the loan; refuse to repay the loan obtained; through false mortgage bank loan fraud.The credit risk measurement methods on Real estate exploitation loan can be divided intotraditional methods and modern methods. Traditional methods consist mainly of expert methods,rating methodologies and credit scoring methods. Compared to the traditional models, modernmodels focus more on modern finance theory and the application of mathematical statistics.Applicable models used currently include Credit Metrics model, Credit, Credit Portfolio Viewmodel, Credit Risk+model, KMV model and analysis of credit system model. Among them, theCPV model is the only one which could connect economic status with the events of default, andthe transition matrix can be reflected by economic cycle. This article compares several kinds ofrisk measurement models, and decided to use CPV (Credit Portfolio View) model to measureexploitation loans and credit risks. By choosing four macroeconomic variables: the Countryhousing climate index, the business climate index, the consumer price index and House priceindex, I contributed a CPV model. The empirical result shows that the Country housing climateindex, the business climate index, and House price index has a significant influence to the realestate exploitation loan default rate.On the basis of earlier analysis on exploitation loan credit risks, the article gives threesuggestions to prevent and control credit risks on real estate exploitation loan: First of all,perfecting the credit system and credit rating system; secondly, establish real estate warning indexsystem on credit risk; Thirdly, improve the control of real estate credit risk of commercial banks inChina.