Measurement Study On Credit Risk Of China’s Commercial Banks From Steel Industry

In recent years, the development of steel industry suffered heavy losses, especially theproblem of excess production capacity is still outstanding. First half of2013, the steelindustry performance remained unsatisfactory, the average profit margin is only0.13%,which is at the bottom of the industry. The poor performance of Steel industry increases thepotential bank credit risk, causing the bank industry and even the whole society’s attention.Influence of development of iron and steel industry by the state industrial policy andeconomic fluctuation is large, at the same time, the industry also faces the pressure of therising cost of imported iron ore, and profit is corresponding extrusion. Downstream sluggishdemand for steel products and the continuous supply of steel enterprises lead to seriousstructural overcapacity. In addition,the repayment willingness and ability of steel enterprisesalso plays a vital role in credit risk of bank. In addition, the bank is also exist many factorsaffect the credit risk of iron and steel industry, such as credit risk management practices lagbehind and the bank staff’s improper operation.At present, domestic and foreign scholars on the iron and steel industry of bank creditrisk mainly concentrated on the theoretical analysis, while by using risk measure model forquantitative analysis is less.This selection of Logistic model and Factor analysis method arecombined in the article, finally the default probability of listed steel companies can beconcluded, which can verify the past default probability and also predict the defaultprobability of the future. Finally this paper proposes suggestions and measures forcommercial banks and the iron and steel industry, such as the assessment of commercialbank credit risk of iron and steel industry, can be combined with quantitative analysis andqualitative analysis of logisitc model, which can greatly improve the accuracy of riskassessment.