Research On The Risk Early Warning System Of Commercial Banks In China

Commercial banks play an important role in the modern financial system, while high risk exist in each aspect of operation and management of commercial banks. It is the focuses to supervise and regulate the risk-based management of the banking institutions. That is for promoting the financial stability and facilitating financial innovation at the same time.International financial crisis prompted the research about risk warning system of commercial banks acceleration. Nowadays China steps into a period of rapid development in the banking sector. In the face of rapidly changing macroeconomic environment, Chinese risk early warning system is not perfect in the banking sector. The majority of the risk-based management pay attentions to remedial measures after risk happened instead of prior warning the risks of banking institutions. Therefore, it has important theoretical and practical significance to do the research on the early warning system of commercial banks in China.The research is about risk warning system of the banking institutions from theory and practice. First, I have an overview of foreign and domestic research on risk early warning system of commercial banks. Second, make a sort of relevant concepts and theories of risk and early warning systems, including the conceptions of commercial bank risk, types and methods and models. Analyze the current situation and the six causes of commercial banks risk from credit risk, liquidity risk, capital adequacy, earnings, swindle prevention & control risk and macroeconomic risk. Again, formulate the risk warning indicator system based on quantitative and qualitative indicators of commercial banks. Analyze the influence of various indicators on the risk of commercial banks. At last, use the analytic hierarchy process to conduct a comprehensive index measure of risk indicators. Classify into four levels( no warning, warning light, medium and heavy according to risk scores. Finally, through constant training and optimizing neural network model, established the Chinese commercial Banks' risk early warning system, and the construct validity of the neural network model, selection of cross section data of the listed commercial Banks from 2009 to 2013 as samples, using65 data of commercial bank, test results show that the system used in China's commercial Banks operating risk early warning.