Research On The Risk Management Of A Rural Commercial Bank

In recent years， more and more domestic commercial banks and foreign commercial bankshave rapidly expanded by increasing the number of branches. At the same time， allcommercial banks quickly increase their product innovation and services level to face the fiercecompetition among banks. It is quite difficult for banks to acquire considerable profit just dependon traditional business， such as deposit and loan spreads. It is also unable to meet the needs ofcommercial banks profit growth in this competitive market. As the large and medium-sizedenterprises have limited numbers and is very competitive among banks， it is very difficult forcommercial banks to make big breakthrough. We know that small businesses are essentialpower to the sustainable development of our national economy and the stability of our country.Besides， small enterprises account for the majority of the market with great influence on theeconomic development. So more and more commercial banks begin to focus their eyes onpromising small businesses and positively carry out financial services business in order to graspthe opportunity to make a big breakthrough. What is more，many banks have set up specialcenters for providing financial services to small businesses. However， due to their own lackof small businesses and the limit of policies and regulations of banks in carrying out the creditoperations of small businesses， credit business of small companies does not success as weexpect. As we know， small businesses are born with limitations， such as their lack ofcollateral and great operating risk， which is impossible to change. So the key factor ofinfluencing the development of credit business to small business is commercial banks themselveslimitation in choosing credit risk management model. Many banks cannot take proper，scientific end effective risk management approach in establishing the standards of access tosmall businesses， the examination and approval of loans and the risk monitoring after credit.What is worse， most banks still use the credit risk management model of large andmedium-sized enterprises. So banks have to take relatively conservative attitude in promotingcredit business of small companies. As a result， financing needs of small businesses stillcannot be resolved. There is a long way for commercial banks to successfully expand the creditbusiness of small companies.The main reason that I select A Rural Commercial Bank is that medium-sized banks and small banks， especially rural banks， cannot offer high-quality financial services compared tolarge commercial banks because their business are subject to limited funds and resources. Inthe increasingly competitive environment， large commercial banks have Absolute advantages incompeting for large and medium enterprises. However，due to geographical advantage and theadvantages of small banks， local rural commercial banks can provide economical and efficientfinancial services to small businesses. Firstly， this paper introduces some theoretical knowledgeAbout small business loans and then analysis the characteristics of small businesses and theircredit risk. Through elaborating the importance of small businesses to medium-sized banks andsmall banks， I come out the necessity of developing credit business of small companies for Arural commercial bank under the condition of strategic transformation. Secondly， I introducethe history and the background of A rural commercial bank and then I describe the method ofcontrolling risk in the process of granting loans. Thirdly， I point out the shortages existing inthe credit risk management and then I summarize the solutions.