The Applicability Of The Financial Early Warning Model In The Credit Risk Assessment Of Commercial Banks

The current Chinese economy has come to the period of the growth stage of "new normal".The development of real economic is slowing down.Enterprises' debt paying ability is dropping but the default probability is increasing.The bank credit risk are becoming more serious and the non-performing loan ratio is rising.Small and medium-sized enterprises which have huge funding needs and low anti-risk ability have became a strong growth point of future economic benefits thanks to the adjustment of the economic structure.Under new situations and circumstances,commercial banks must improve their ability to assess loan risk of small and mediumsized enterprises,especially credit risk and improve the credit risk assessment process in accordance with the characteristics of small and medium-sized enterprises.At present,the traditional financial analysis method is used to evaluate the risk of the enterprises,which also needs non-financial information.Evaluation results need to rely on expert judgment,which are obviously tinged with empiricism.The biggest problem in methodology is low efficiency and high cost.The financial early warning model based on accounting data has been applied to predict the development trend of enterprise management thanks to the development of measurement methods.It also provides a new method for bank credit risk assessment.This paper chose two small and medium sized enterprises which were credit default in S bank as analysis object,using case analysis method and comparative analysis method,to research on the applicability of multiple linear financial crisis warning model for the bank to assess the credit risk.After reading the financial crisis early warning study of domestic and foreign literature,this paper found that both modified Z-Score model put forward by Altman and the Percentage model based on Z-Score models are applicable to the case enterprises in consideration of the basic information and financial data.This paper firstly introduced the model theory,then carried out the case study.By applying the traditional financial analysis and financial early-warning model to the two small and medium-sized enterprises credit default of the S bank for credit risk assessment,this paper compared the risk assessment of the early-warning model with the risk assessment of the traditional financial analysis and the real risk.It is proved that both the financial early-warning model and the traditional financial analysis underestimate credit risk in different degree,and models showed greater degree of underestimating defects.The case study indicates that,due to the fact that some of the indicators have industry characteristics,and the fact that the weight of the index is not reasonable,the financial crisis early warning models show a large defect.This paper analyzes the causes of the inapplicability,and puts forward some suggestions.Finally,it returns to the bank credit practice with suggestions to speed up the development of research on financial crisis early warning model of small and medium-sized enterprises as soon as possible to provide a supplementary means of scientific evaluation of bank credit risk.The paper also proposes the bank to improve the risk assessment system,to strengthen the talent construction of credit risk assessment with the aim of constantly improving the ability and efficiency of credit risk assessment.