The Risk Analysis Of Rural Small Finance Institutions Based On VaR

Going with the rapid development of financial institutions, increasingly fierce competition has made the business types of banks increasingly rich. The rapid development of the financial markets has highlighted the importance of financial risk management. Especially when the Internet wealth products have emerged, banks and other financial institutions have to confront great challenges. The internet wealth products have represented as high-yield, revenue transparency, and fast and convenient. While the central bank put forward to the program about the interest rate liberalization, but so far, only the loan interest rate liberalization has been implemented to control credit scale. Official said the deposit rate liberalization will be completed in one year or two year. Once the deposit interest rate liberalization goes to implement, regardless of the Internet and other financial products caused by small financial institutions in rural areas, rural financial institutions will face to a huge challenge. For small rural financial institutions, whether Internet banking or the interest rate market would make a threat to the survival of them in future.The development of rural economy and agricultural production are constrained by climate and other natural conditions, as well as business types are single in rural financial institutions, so there has been the risk of market operation when the small rural financial institutions was established. Risk management of the bank is still in its infancy, especially in rural microfinance institutions over the brief history of the development, infrastructure is not robust enough. Therefore there is a big need for a detailed analysis of its risks.The full text is divided into seven parts.The first part mainly introduces the summarizing the status of domestic and foreign research situation, research ideas and methods, research innovation and inadequate.The second part mainly of rural small financial institutions operating risk defining, characteristics and analyze its risk, it is concluded that the risk classification.The third part mainly analyzes the rural small village banks in financial institutions, small loans companies, capital of peer support system of the three management present situation, and risk analysis on the current management status, to find the root causes of risks.The fourth part, the main factor is to list rural small financial institutions variable classification, and also list the process variables. The fifth part, all applicable VaR methods are listed, and will focus on the rural small financial institutions of each kind of risk to build the corresponding model, its may face the risk of predictive control. In this paper, as the operational risk are arose from five kinds of risks, so this paper withstands the combination of AHP and principles questionnaires to calculate the occurrence of operational risk capital allocation for operational risk. For credit risk, this article makes an example to verify the use of VaR to measure credit risk. Next to analyze the size of the credit risk of loss through the establishment of Credit Metrics model empirical based on VaR. For market risk, the paper changed the routine, using the Delta method for analysis. For this particular industry risk exposure, the establishment of GARCH-VaR and the ADF test help this article analyze.The sixth part, after rural small financial institutions for risk analysis, is putting forward several risk control strategies. Rural small financial institutions after all grow shorter history, foundation solid enough, so the need for government and related administrative departments should give policy support. In addition, small financial institutions can be appropriate to rely on the shoulders of giants, providing safeguard for their stable operation. Finally, internal to external, rural small financial institutions shall be further to improve the internal risk management mechanism, and strengthen internal staff all aspects of quality system training to minimize risk.The seventh part summarizes conclusions and describes the issues to be explored further. Nation widely, the overall market risk is still relatively small, mainly rural and small business single financial institution concerned. However, with the gradual implementation of market-oriented interest rates, the future competition among banks and other financial institutions will become increasingly large, the risk of rural financial institutions, and even survival, are considerable problems.