A Study Of Credit Risk Precaution Of Bank Of China B Branch

Credit is one of the core businesses of commercial banks, in which risk management plays avital important role.Effective risk management is the key to insure both asset quality and stabledevelopment for basic financial institutions. The research of this thesis can do good to improverisk management level of basic financial institutions and finance employees. Besides, theresearch is much closer to credit risk management options in which it shows a better realisticmeaning.In the first place, we analyzed the current conditions of credit risk and relative measures ofBank of China. We found that credit risk existed in every process of credit, and the risks can bedivided into market risk, loan risk, operational risk and other risk. Market risk is mainly indealing, exchange and interest rate; loan risk is mainly in capital tight, corporate cheat and moralrisk; operational risk is mainly in the structural aspects of credit process; other risk is mainly inliquidity risk and reputation risk. Though Bank of China had built relatively complete credit riskprevention system, the inadequate perspective of policies, lagged management culture, too muchapproval process and less talented employees are still remaining.Moreover, as to the existing questions of credit risk in Bank of China B branch, we foundintrinsic and extrinsic reasons. As to the intrinsic reasons, the management culture to prevent riskof basic institutes of Bank of China is incomplete, the intrinsic control towards branches is notenough, the client resources does not operate under a normal cycle process, some operationaldecisions are out of the extra market environment, and less talented employees all can lead tocredit risk. As to the extrinsic reasons, the slow local economic development, informationasymmetry between banks and corporate, tight competition between financial institutes andincomplete law of contract all can result in credit risk problems.In addition, according to the intrinsic and extrinsic reasons to credit risk problems of Bankof China, we proposed relative measures to prevent and solve these risk problems. Banks shouldbuild their management culture system to prevent credit risk, specific measures like riskprevention management system, strengthening of credit plan, the construction of scientific credit risk management system, slow release methods to manage credit risk and creational managementmeasures to credit risk.Finally, we conclude the above contents and the next research questions.