SMEs Credit Risk Management In Bank Of China Branch X

In the development of our national economy, SMEs, small and medium-sized enterprises, are playing a role that is very important and even indispensable. SMEs have a prominent contribution not only in taxation and employment, they also get more and more attention from the states as increasing their management capacity and technological innovation capability. At the same time, the competition between the commercial banks is gradually increasing, which inevitably leads to the development of the market of SME credit business. However, at the time of seeking profit from the SME credit business, the commercial banks are also facing great risks. The SME credit risk is very difficult to control not only because of the limitations and characteristics of SMEs, but because there exists non-standard in the operation process and in the management of the commercial banks in China. Due to the high risk of the SME credit, the banks prefer not to lend, which causes the difficulty of financing for the SMEs. But the embarrassing situation would be alleviated if the management of the SME credit risk can be effectively increased, and we can see easily that the commercial banks will obtain enough profits and enhance competitiveness. Since the reform and opening, China’s commercial banks have made tremendous progress in their operation and more progress can be found in the area of risk control and management. But as the ability of credit risk management, the comprehensive construction of integrated risk management is still absent, so is the quantitative risk analysis and the study of credit risk doesn’t take the credit mechanism of internal control evaluation into consideration, which is the emergent problems to be solved in China. Therefore, this article’s research purpose is to optimizing the work of risk management during the SME credit businesses. In the article, I chose a branch of a big commercial bank in China as an example to analyze the problems that might exist in the practical work and to give some possible solutions, which has important practical significance.The article first introduces the concept of small and medium-sized enterprises and SME loans, bank credit-related theories mentioned herein as well as domestic and foreign scholars in recent years. The theory of credit risk is expounded on, making the information asymmetry existing between banks and SMEs as a breakthrough point. Then it details the explanation of the meaning and types of the credit risk, builds a management system for the credit risk and analyzes the control methods for the credit risk. In the construction of the management system of credit risk, it combines with the framework of internal control and sets up a system that is unified and organic, and build up the system from six aspects as follows:risk strategy, risk assessment, risk control, information exchange, supervise and inspect, organizational structure. Later in the article, during the analysis of the branch X Case, this management system is used on the process of analyzing the existing problems on this six aspects, which has great utility value.Next, the author takes the SME credit business in Bank of China Branch X as an example, using the first-hand information obtained in field surveys, to analyze the actual situation of the branch objectively and comprehensively. Using the theoretical knowledge above, the author points out the existing problems and proposes some method for improving the shortcomings according to the methods mentioned above of the credit risk control.The SME credit business processes are optimized for the X branch and pertinent recommendations to its credit risk management are proposed. The suggestions in this paper are meant to improve the SME credit business process, from information technology and human resources areas, including the strengthening of the customer survey before the loan, the improvement of the customer credit rating mechanisms, the simplifying approval procedures, the strengthening of the post-loan management, innovation and risk management awareness, etc.At last, the author generalizes the conclusion by contacting the current situation of SMEs in our country and by combining the own situation of commercial banks, especially the state-owned commercial banks in China. The author even combines the social responsibility of commercial banks and expresses bright expectations for them, which makes the article have the significance of reference for the other commercial banks.This article seeks to achieve a breakthrough in theory, business practices and the article structure. Theoretical aspects:improve the management system for the credit risk and analyze the control methods for the credit risk, combines with the framework of internal control and sets up a system that is unified and organic; Practice areas: primary research through long-term analysis and a lot of instances, intuitive and objective reveals the problems of small business loans, SME loans made to solve the problem of countermeasures from the bank angle. On paper structure, the paper from abroad MBA dissertation structure, featuring case studies and perspectives will combine demonstration, focusing on solving practical problems.Nowadays, the study on the credit risk management of commercial bank is always for large enterprises. Due to the limitation of the author’s writing skills, the description of the theory may be scattered between the lines, such as the credit rationing theory and the adverse selection and moral hazard theories. Based on the analysis of credit risk theory.During the writing of this article, the author went into X branch for deep survey, and combined with previous experience of working there to think about the management of SME credit from different perspectives, considering the bank’s role as a small branch of a big bank. Actually, the branches are the foundation of commercial banks for its numbers are very huge and for they are directly facing to the SMEs. Therefore the article takes this as a starting point to complete the discussion on the management of SME credit risk with some reference value and practical significance. At the same time, due to the limitation of the author’s theoretical level, the article cannot include the quantitative analysis of the risks; and due to internal confidential information and documents, the author cannot complete the collection of certain data, the author has to express her deep regret for the shortcomings.