Research On The Credit Risk Assessment Of Loans In Real State Development Of China’s Commercial Banks

The problem of risk control in real state credit comes along with the developmentof real state industry at high speed and the increase of the proportion of real statecredit in the total credit in banks. The real state industry is a typical one，in whichfunds are highly gathered. Most parts of funds in its opening-up and running are fromfinancial structures and its development is terribly depends upon the loans given bycommercial banks, which makes risks in real state industry highly concentrate in bankstr’uctures. Whats more，at present, China’s commercial banks lack exact assessmentsof risks in real state credit and effective managing methods. All those issues haveadded up to the management risks in commercial banks. On the base of the well-builtmethods of credit-risk assessment in western countries, this paper researches on theproblem of how to strengthen the credit assessment and risk control in China’s realstate industry, and further more，probes into assessment methods, which is suitable forChina’s banks when they evaluate risks of credit properties in real state industry.Nowadays, a set of complete model system is coming into being in internationalmanagement field of credit risk. That is helpful for reference to the quantificationmanagement of credit risks lying in China’s commercial banks. At present, in theworld, there exist some influential and widely-used models of credit risk，such asKMV，Credit Metrics, Credit Risk+，which are somewhat suitable in the situation ofhighly-developed economy in China. By means of empirical study, this paper, takingMKV as an example, tries to verify the suitability of modern credit risk models inChina’s real state industry. The result of empirical research shows that the defaultlength can，as a whole, identify ST companies and non-ST companies, tell the creditsituation of listed companies in China’s real state industry and is useful for China’scommercial banks to assess credit risks of real state. At the same time, this paper findsthat the assessment models of modern credit risk are limited in the ability for China’scommercial banks to verify credit risks. Therefore，some more works needs to be done，such as continuing to develop and perfect capital markets, improving the managementsystem of credit risks and revising and completing the models according to China’spractical situation.