Research On The Status Quo Of Loan Loss Reserve System Of Commercial Banks In China

Loan loss preparation is a risk provision that the bank draws from the operating profit in order to withstand the credit risk of the loan assets and make up the expected losses.It has the role of preventing the credit risk of bank credit assets and supplementing the core capital of the bank.It is also the current banking industry in China.Regulatory authorities are an important factor in the supervision of commercial banks.The loan loss reserve system is an important part of risk control for commercial banks.It affects both the measurement of assets of commercial banks and the coverage of credit risk.How to prepare for loan loss will also be more transparent for commercial banks and the transparency of information disclosure make a large impact.The purpose of establishing the loan loss preparation system is to use the risk buffer to prevent the loss of bank credit assets from the perspective of accounting information.At the same time,the system has gradually become the risk of commercial banks.Part of the early warning mechanism.In fact,in the initial stage of establishing the system,the loan loss preparation system played a pivotal role in supervising commercial banks.However,with the cyclical fluctuations in the economy,the financial crisis in 2008 revealed the pro-cyclicality of the current "losses actually incurred" model for the provision of current loan losses.After the financial crisis in 2008,all sectors of the society severely criticized the pro-cyclicality of the actual loss model,and believed that the model played a negative role in expanding the fluctuation in this financial crisis.The premise of the role of loan loss reserves is that bank operators can accurately determine the future risk of loan losses,so how to define and measure this potential risk,and scientifically withdraw loan loss reserves for bank management and banking supervision departments For investors,as well as accounting standards setting agencies,it is a huge challenge.This article first sorts out and summarizes the development of China’s loan loss preparation system,and interprets the more key systems and guidelines in order to have a comprehensive understanding of the loan loss preparation system itself and the status quo in China.Then,taking China’s five joint-stock listed commercial banks as an example,through reference and analysis of the annual financial reports disclosed by these joint-stock commercial banks for the period 2012 to 2016,the scope of disclosure of loan loss preparation related contents and loans The contents and data of the method used for the provision for loss provisions and the amount of provision for loan losses were compared,and the disclosure of relevant information in the process of accruing loan losses from various commercial banks under the current banking system was found to be incomplete.The amount of provision for loan losses was insufficient,the method for accruing loan loss provisions was not uniform,and the loan loss provision provision model had pro-cyclical issues.Then on the basis of the problems found,the corresponding solutions and proposals are proposed,hoping to provide useful help for the improvement of the loan loss preparation system for commercial banks in China.