Study on Credit Risk Control of Commercial Banks-商業銀行信用風險控制的研究
03-20, 2014
Study on Credit Risk Control of Commercial Banks
商業銀行信用風險控制的研究
ABSTRACT
摘要
Commercial banks have a variety of risks, but credit risk is the most basic and most important risks. There are many causes of credit risk. In China,the risk of commercial banks not only have our unique reasons, but also have similar reasons with developed Western countries. The asymmetry of information and the single finance structure of our corporate are principle cause of China's commercial credit risk .Analysing the causes, we can in-depth understand China's economic and social factors. So we can understand China's commercial banks credit widespread. We also know that the current commercial bank in China by any means to prevent and control credit risk. But we can not just pay our attention in our country. We also analyze the international advanced credit risk management techniques. After all, how to improve and control is our main concern. Therefore, we propose several recommendations, for example,to strengthen post-loan management,to use credit derivatives to tranfer risk and to improve the information symmetric and so on. The macroeconomic is volatility both at home and abroad today, and how to control credit risk is the long-term question to think about.
商業銀行有各種各樣的風險，但是信用風險是最基本也是最重要的風險。信用風險的成因有多種。在我國，商業銀行的風險既有我國獨有的原因，也有與西方發達國家類似的原因。而信息的不對稱性和我國企業融資結構單一，是我國商業的信用風險的倆大主要原因。通過剖析信用風險的成因，我們可以深入的了解了我國的經濟因素和社會因素。從而我們可以了解到我國商業銀行的的信用普遍現狀。同時，我們也知道了目前我國的商業銀行是通過什么方法來預防和控制信用風險的。但是，我們不能把目光局限在國內。我們還要分析國際上的先進的信用風險管理技術。如何完善并控制是我們主要關注的問題。因此，我們提出了幾種建議，比如，加強貸后管理工作，利用信用衍生工具轉移風險，提高信息對稱度等。在國內外宏觀經濟劇烈波動的今天，我們如何實現對信用風險的控制是我們長期要思考的問題。
Key Words: Credit Risk Asymmetry Information Credit Derivatives Post-lending work Transfer Risk
關鍵詞：信用風險 , 信息的不對稱性 , 信用衍生工具 , 貸后管理工作 , 轉移風險
Study on Credit Risk Control of Commercial Banks
商業銀行信用風險控制的研究
·1 Introduction
1 引言#p#分頁標題#e#
1 引言#p#分頁標題#e#
The financial industry is a high-risk industries. In providing financial services for the people ,commercial banks obtain profits and in this process they face risks. Among them, the credit risk is one of the most important risks. Credit risk is that the borrower, the bond issuer or financial transactions for various reasons can not perform what they shoud do. And in this case ,the financial institution or the invrstment suffer form losses. In China, commercial banks, credit risk is primarily the following forms. （1) The upward trend in non-performing loans, and it account for a relatively high proportion. (2) Banks' non-performing loans is difficult to recove and this make the problem even worse(Shanyu duan , 2010).
金融業是一個高風險的行業。在為人民提供金融服務，商業銀行獲取利潤的過程中他們面臨著風險。其中，信用風險是最重要的風險之一。信用風險是指借款人，債券發行人或因各種原因金融交易無法履行他們的義務。在這種情況下，金融機構將遭受損失。在中國，商業銀行，信貸風險主要有以下幾種形式。 （1）呈上升趨勢的不良貸款，它占的比例比較高。 （2）銀行的不良貸款很難避免，這使問題變得更糟（Shanyu duan，2010）。
金融業是一個高風險的行業。在為人民提供金融服務，商業銀行獲取利潤的過程中他們面臨著風險。其中，信用風險是最重要的風險之一。信用風險是指借款人，債券發行人或因各種原因金融交易無法履行他們的義務。在這種情況下，金融機構將遭受損失。在中國，商業銀行，信貸風險主要有以下幾種形式。 （1）呈上升趨勢的不良貸款，它占的比例比較高。 （2）銀行的不良貸款很難避免，這使問題變得更糟（Shanyu duan，2010）。
Credit risk management is the primary work of commercial bank credit. It is related to the bank's survival and stability of society. With the accelerated pace of China's financial reform and financial sector openness , the domestic banking sector is facing severe challenges from international competition.When appearing new forms of financial globalization, China must learn from international commercial banks' advanced credit risk management experience to develop their own characteristics and to establish credit risk management models. Only by strengthen credit risk management, can they meet the "Basel II" requirements.
China's commercial banks has gradually established a credit risk management system, but in compared with the international banks, in the data collection, there is a considerable gap in processing and the utilization of measurement methods(Zhihui Qiu,2010). In particully, the quantitative risk management is still very backward. From the current actual situation, there is still something more to be desired in credit risk management philosophy, technical, institutional and other aspects. Compared with the developed countries, China's commercial banks under the management of credit risk mainly lie in the following areas.
(1) China's commercial banks have not yet formed a correct idea of credit risk management.
At present , Chinese commercial banks currently do not operate according to law. The inadequate awareness of most bank staff about credit risk management and the older concept of credit risk management not only can not adapt to the rapid development of new era business but also the complex needs in risk environment. Outstanding performances are as the following aspects. First, it is inadequate on the knowledge of the coordination of between the immediae and long-term goal of developing. Second, Staff did not fully understand the relationships between the development of banking and the credit risk management. Third, credit risk management awareness is inadequate and bank management staff do not carry out adequately in the entire process#p#分頁標題#e#
(2) Quantitative credit risk banks are poorly managed and have not yet established commercial bank's credit risk measurement and management of advanced technology. A modern commercial bank's credit risk management techniques are very rich. What is different form traditional credit risk management is that the modern credit risk management is increasingly focusing on quantitative analysis, extensive use of mathematical statistical models and financial engineering(Sha Li，2007). In China, commercial banks still remain in the quantitative management of assets and liabilities management. Risk measurement statistics have not been able to realise systematic and scientific measurement .There still exists the excessive workload, lack of effectiveness, the external ratings lack of information in credit risk. Practical challenges which are to be further developed in credit risk management model application and management of technology is still remian.
(3) the underlying database to be enriched, the management pending test results
According to historical data for different levels of credit defaults and the actual extent of statistical analysis, we can test the results of the objectivity of credit risk management. However, because its has a short time that the majority of our banks develop credit risk management, we are lack of relevant data accumulation. At the same time, in China's information disclosure, there is a considerable gap between the developed countries. Many is unable to collect financial information of enterprises, and some enterprises have been made the public financial data distort. This makes the problem which because of the quality of data is resulting in a lack of credibility even worse. The results of the analysis, which can not establish a variety of credit risk management models, is not able to apply the advanced credit risk management techniques to the bank's actual credit risk management.
(4) Internal rating method is relatively simple.They only focus on the reporting data. Rating object is not a comprehensive, so risk-revealing is inadequate. What’s more, ratings remains to be tested
First, despite their different focuses, the Chinese commercial bank's internal rating system are very similar to the basic method. Using a simple scoring method, be lack of objective basis. Second, it is a short time that China's commercial banks develop customer rating, and most banks only rate the clients credit but do not rate on the loans. Third, That China's current ratings of all commercial banks within the bank line of credit was used only for identificating, but do not open to the public.This make it difficult to judge the accuracy of ratings. Finally, compared with the advanced international banks, the majority of our commercial bank's internal rating methodology have a considerable gap in rating, the rating results of tests or rating organization structure, the underlying database and so(Junhua Wang ,2006). In return ,these differences greatly limit the IRB to reveal the role and control of risk.#p#分頁標題#e#
(5) China have not develop a healthy social credit system, and the corporate credit is difficult to truly reflect .As our society is general lack of awareness of credit, corporate financial data authenticity is not high. Credit rating is not fully play a central role in loan decision-making and in loan pricing, at the grass-roots credit, and credit risk management staff do not fully understand the importance and did not actively approve corporate financial data. All of above result in that credit risk management in the financial data was not comprehensive and accurate. Even worse, the risk is not a true reflection, so the results of the credit rating of enterprises does not match the actual level of risk and can not truly reflect the current business real operating conditions. Therefore, the external environment of China's commercial bank's credit risk management is far from perfect. It has brought enormous difficulties to credit risk management of China's commercial banks, directly.
(6)China is not only short of professional of credit risk management，but also lack of appropriate technical experts .It is a short time that China's commercial banks develop credit risk management, and thus whether it is the accumulation of management experience or the training of managers are quite scarce. This seriously restricte in promoting and using the advanced credit risk management models and methods.
The proposals of China's commercial banks are to strengthen credit risk management.
Although in the developed countries, the modern credit risk management techniques are already quite mature and perfect. There are many methods and techniques that we can learn from. But never, we can copy. Because it is not yet available that we use the credit risk management model of modern commercial banks in developed countries. Specifically, The first is data collection issues.The second is related to credit rating which is not enough authority .Third, China has not yet sophisticated financial derivative products, not to mention the emerging credit derivatives market.
However, as with the increasing competition in financial industry and the increasing financial risks, enhancing credit risk management has become an inevitabletrend. Referencing successful experience of developed credit risk management can effectively prevent and control financial risks. Seriously studying and summarizing Chinese banking Situation can maintain China banking healthy development.
·2 The concept and characteristics of Commercial Bank Credit Risk
·2.1 The basical concept of Commerical Bank Credit Risk
Commercial banks’ credit risk refers to the borrower or counterparty that fails to meet its financial or contractual nature of commercial bank debt obligations and results in the risk of loss.
Risk management is a core issue in financial management. Credit risk is a principal issue that the banks and enterprises have to face. Along with economic globalization and the expansion of credit transactions, credit risk are increasingly attracting the attention of the national financial institutions.#p#分頁標題#e#
·2．2 Expansion of the concept of credit risk
Regarding to the definition of credit risk, there are many different views.
The traditional view is that credit risk is the failure of the debtor to repay their debts as scheduled to the breach of contract caused by the Economy of the main business risks. With the changes of modern risk environments and risk management, technology development, communication ,the definition of integration can no longer reflects the modern nature of credit risk and its management.
In modern sense, credit risk also includes the market that due to a borrower or counterparty defaults , the bank suffer losses. More generally speaking, credit risk is not only because of borrower's credit rating changes and changes in performance capabilities , but also the above operations lead to changes in the market value of the debt arising from the possibility of loss.
That credit risk also known as default risk that refers to the counterparty fails to fulfill a contractual obligation of contract which is caused by the risk of economic loss, that is a fiduciary responsibility unable to meet debt service credit and the actual person's expected return derail the possibility of revenue, which is the main types of financial risks. In the past few years, the use of new financial tools to manage credit risk credit derivatives is developing rapidly. That the appropriate use of credit derivatives, investors can reduce credit risk. Industry insiders estimate that the credit derivatives market development, only a few years, from 95 years, the world will have a 20 billion U.S. dollars in transaction volumes（Xiaoqing Zhou，2009）.
Credit risk is the borrowers for various reasons, unable to timely and full repayment of debt or bank loans. In the case of default, the creditor or bank will not get the expected benefits due to incurred financial losses.
Credit risk is caused by two reasons.
The first one is the cyclical economic operation. In periods of economic expansion in credit risk reduction, a strong profitability ability can reduce the overall default rate. In periods of economic contraction in the credit risk increases, because the overall deterioration of the profitability of the borrower, for various reasons, can not increase the likelihood of timely and full repayment.
Second, the company affect the occurrence of special events. This particular incident has nothing to do with the economic operation cycle, but the company have an important impact. For example, the quality of the product litigation. For example is,When people know the impact of asbestos on human health of the facts, what happened to product liability litigation to Johns-Manville Corporation? A well-known leader in the asbestos industry in the location of the company goes bankrupt and can not to repay its debt. #p#分頁標題#e#
·2.3 Characteristcs of Commercial Banks Credit Risk
There are four main characteristics of credit risk.
First, Objectivity, not to man's will;
First, Objectivity, not to man's will;
Second, Infectious, one or a few of the main operational difficulties or bankruptcy of credit can lead to disruptions in the credit chain and the entire credit order in disorder;
Third, Controllability, the risks can be minimized by controled;
The following are financial institutions table of loan classification.
The table of loan classification in major banking institutions Unit: billion /%
Loan Type 2003 2004 2005 2006
Normal Loans 112728 82.20 112847 86.79 139405 91.39 150321 91.97
Non-performing Loans 24406 17.80 17176 13.21 13134 8.61 13125 8.03
Sub-class 3342 2.44 3075 2.36 3336 2.19 3281 2.01
Suspect 14316 10.44 8899 6.84 4990 3.27 5035 3.08
Loss of Class 6747 4.92 5202 4.00 4807 3.15 4808 2.94
Data Source：China Banking Regulatory Commission
Forth, Cyclical expansion and contraction of credit alternating.
That credit risk due to the interests of companies or individuals would have a huge impact. So credit risk management becomes a very important work, and large companies often have specialized staff for each transaction on the credit situation.This can measured the possible profit and loss by an assessment, as well as minimize possible losses. Credit risk management, referring to the counterparty for the transaction, the borrower or bond issuer has the default of "likelihood" arising from the risks to manage. If we detailed split this risk components,it can be divided into default probability, recoverable rate of post-default , principal principal.
The Joint-stock Banks Listed On the Completion Of the Risk Control Indicators In 2007
Bank Name Capital adequacy ratio (%) Core capital adequacy ratio (%) Single largest customer loan ratio (%)) The largest proportio-n of 10 customer-s (%) Non-performing loan ratio -5 grade Classific-ation (%) NPL provisio-n coverage -5 grade Classification (%)
Bank of Nanjing Co., Ltd. 30.67 27.38 3.96 25.54 1.79 146.88
Bank of Beijing Co., Ltd. 20.11 17.47 9.14 43.9 2.06 119.88
Shenzhen Development Bank Co., Ltd. 5.77 5.77 5.41 42.74 5.62 48.28
Hua Xia Bank Co., Ltd. 8.27 4.3 5.58 41.7 2.25 109.27
Industrial Bank Co., Ltd. 11.73 8.83 4.18 20.94 1.15 155.21
China Minsheng Banking Co., Ltd. 10.73 7.4 3.75 28.17 1.22 113.14
Pudong Development Bank Co., Ltd. 9.15 5.01 4.21 28.93 1.46 191.08 #p#分頁標題#e#
CITIC Bank Corporation Limited 15.27 13.14 3.41 25.03 1.48 110.01
China Merchants Bank Co., Ltd. 10.67 9.02 6.13 32.42 1.54 180.39
Bank of Communications Co., Ltd. 14.44 10.27 2.7 21.73 2.05 95.63
Mean 13.68 10.86 4.85 31.11 2.06 126.98
Data sources: Wind Information
Credit risk Management is the current financial industry's biggest issues. In addition for that we shoud put our focus on "lending area" credit risk management, but also on its investment in the "counterparty" or "issuer" to credit risk management.
·3 Causes of Commercial Bank Credit Risk
Credit risk is one of the oldest, but also the most important risks in the financial market.
Bank credit risk basically include credit default risk and the risk of credit spreads. Credit default risk is defined that as one of the commercial transactions, because the other transaction side is of the breach of contract, the previous party of the transaction shall be entitled to the present value of expected cash flows to reduce the risk of loss suffered. Credit spread risk is the risk in commercial transactions, trade credit quality changing in party (including the default) that enable the transaction the other party shall be entitled to the present value of expected cash changing face an uncertain risks. In today's world, many countries and regions have varying degrees of banking crises. China is no exception. Although China has not yet emerged a large number of bank failures, but there is a single banking crises and State-owned banks have appeared excessively high proportion of non-performing assets, illiquid assets and high-risk symptoms. Banking crisis is the the grim reality that we have to face.
·3.1 China's macro-economic factors
From the scope of business operations, the commercial banks in credit risk has its general causes and China's commercial banks general credit risk is no exception.
Since 2009, in the international situation, there are some significant changes. The international oil prices prices rise sharply. In may, the third consecutive time since the Bank of England raise interest rates. Fed raise interest rates twice in a row, too. Although China has not raised interest rates, the main indicators of financial operations perspective has appeared a rapid tightening of monetary trends. There appears to increase the effect of interest rates. From January to July, RMB loans increased 461.3 billion less year on year. Sub-month view, the degrees the new increased loans less than the same period last year is gradually expanded, which increased 140.4 billion yuan less in May, by 239.6 billion yuan less in June, a negative growth in loans in July 1.9 billion. This phenomenon has disapperred for many years. According to the current growth , the new year goal of 2.6 trillion yuan loans are likely difficult to achieve. In China, commercial bank essentially review the financial situation of the enterprise itself firstly, then decided whether to apply the loan or not. The banks often make Inadequatly forecasting for they did bot grasp the macro-economic cycle. Increasing in the economic cycle, business is generally good, and bank lending is enthusiastic. When adjusted the economic, the decline of enterprise returns and uncertainty factors have increased. There is no doubt that credit risk increases. In the Government's strict non-performing asset ratio of commercial banks in assessing the situation, banks have to contract loans. On the same time, banking system lag will lead to ups and downs of loans, too. Last year, China's GDP increased by 9.1%,and new loans amounted to 3 trillion yuan. If this year's loan suddenly made a sharp reduction, the impact on economic growth is not inconsiderable. ( The above data from the National Department of Comprehensive Statistics , 2004)#p#分頁標題#e#
An interesting problem is that banks non-performing loans will most likely be exposed, increasing financial risks. At present, many large enterprises, especially through capital operation of financial holding companies have emerged in the chain fracture problems, such as Jiangsu, "Iron this event", "Delong incident" .China Southern Securities, China Securities has a problem. There are many financial officials falling by the wayside. At every turn, it is related to several billions, tens of billions, or even hundreds of billions of capital. Just as Mr. Wu Jinglian said, "making the financial black hole, the mechanism has not disappeared." In 2003, the total fixed asset investment of 5.5 trillion yuan in new loans, up to 3 trillion yuan. Even if the proportion of bad loans is not high, the absolute terms would be very impressive. It is worth mentioning is that China's stock market index also reached a new low in recent years, speculators in the call, investors crying, but a listed company is still, as always, enclosing money to speed up the pace. Fell to a group of investors, and a number of listed companies fell to a group of securities firms followed suit fallen. Securities market is like a "time bomb" threatening the economic development and social stability.
·3.1.1Widespread existence of credit risk
The modern economy is a contract-style economy. With the continuous development of finance, new financial product is created, which lead to the continuous expansion of credit. Large-scale useing of modern credit, credit risk exists in a variety of economic activities. Credit risk arising from transactions in a market economy of both sides, when the parties are dealing with non-cash transactions, that is, payment using credit. In this way, they face the risk of counterparty default. so that's why credit risks are widespread nature of the community. This paper studied on the bank's credit risk is mainly present in the bank's credit processes. Each bank issued a loan commitment from the borrower's credit risk, and continued until the loans are recovere. Each bank issued a loan commitment from the borrower's credit risk, and continued until the loans are recovere. Each bank issued a loan commitment from the borrower's credit risk, and continued until the loans are recovere.
•3.1.2 Uncertainty in the credit activitie
The formation of the root causes of credit risk is mainly due to the credit activities of the uncertainty. In modern economic activities, there are a variety of contingencies. Resulting in social activities in the human, there are many uncertainties. In social activities, uncertainty is the main reason for the formation of the risks. In credit activities, uncertainties include the inherent uncertainty and external uncertainty. External uncertainty which comes from the outside of the economic system is the economy, in the process of random chance or unpredictable, changes in the trend, such as macroeconomic trends, the market supply and demand of funds, the political situation, technology and resources conditions and so on. In general, the external uncertainty will impact on the overall market.In this reson, the uncertainty caused by external credit risks and other financial risk is also known as systemic risk. The inherent uncertainty comes from within the economy. It is by the perpetrator of subjective decision-making and inadequate access to information such as causes, with an obvious personality traits. For example, enterprise management, product competitiveness, production scale, financial condition, changes in credit quality, and so on. Those all have a direct bearing on their performance capabilities. The risks arising from the inherent uncertainty, also known as non-systemic risk.#p#分頁標題#e#
•3.1.3 Trading of both asymmetric information.
Asymmetric information refers to that the transaction between the parties to understand the extent of the information is inconsistent, in which one party knows but the other party is unknown or can not know information. In the financial investment activities, symmetric information is relative and asymmetric information is common. Due to the presence of information searching costs and monitoring costs, both in developed and developing countries, banks can not fully acquire operating conditions of enterprises. In a word, banks can not totally grasp the business situation. Which exists in all countries because of information asymmetry bank have the technical non-performing loans. Asymmetric Information in China consists of two aspects. On the one hand, commercial banks and regulatory authorities have the information asymmetry problem . In our financial markets, regulated parties (commercial banks) generally are happy to report good results and news, while avoiding their own bad images and bad information. As a result, the bad information is continuously accumulated in the final amplification. And thus, evolved into the risk of irreparable, regulatory bodies, being unable to fully grasp the information and, therefore, failed to take timely measures to resolve the risk, which would led to the collapse of commercial banks. On the other hand, commercial banks and asymmetric information between enterprises, bank loans, the credit funds of funds into the business cycle, business conditions for its own operating funds to fully grasp the information, but for the banks then have a "gray box" effect, for information on the status of funds operating at a disadvantage. some enterprises tampering with the accounting statements, providing demonstration projects to their advantage and related data. What's worse some even provide false information and false evidence in order to defraud the bank credit . Some companies arbitrarily change the use of the loans.
·3.2 Under developed capital markets, single corporate finance structure
China is ongoing economic reform and institutional transformation. In the period of economic restructuring , on the one hand , State-owned commercial banks are the state's macro regulation and control of financial instruments and the enterprise reform "lubricant". Therefore, commercial banks have been largely influenced by government policy. The movement of commercial bank loans not only should be comply with the Government's policy but also should be conducive to economic reforms. These raise a lot of policy-based loans and has blurred the boundaries of the functions of management and business operations. Too much from the management functions, policy-related business and social benefits of proceeding would undermine the operational functions of the business principles and effectiveness of the bank's own pursuit. This lead to liability regardless of cost, assets, excluding revenues, operating profit excluding and so on. Bank's own operational requirements is very difficult to start to reduce credit risk and improve operational efficiency and achieve their business objectives by adjusting the operating direction and enhancing the management level. On the oher hand, China's capital market is still on start-up phase. The slow development of direct financing and the banking system in a monopoly position are the two resons why enterprise is heavily dependent on banks（《sigma》，2009. Corporate sources of funding are mostly indirect financing through banks, which makes most of the funds of the bank has become the production company working capital and settling in the enterprise. With the continuous deepening of economic reform, a number of industrial system gradually declines. What is more, corporate losses are continuously expanding. To make matters worse, many companies are insolvent. With the corporat lossing the ability to repay, this make the bad assets of banks and the risk of banking inceased.#p#分頁標題#e#
·3.3 Bank's internal and the whole community lacks a good credit environment
·3.3.1 lack of the punishment mechanism
At present, China has not yet formed a relatively complete set of social credit system. Being short of effective mechanisms for non-compliance penalties and laws and regulations have not yet been established（Sheng Jiang，2006）. Under the existing legal framework, lax enforcement of more serious phenomenon, all of which make the market of business entities in measuring the dishonesty the cost - benefits when asymmetry and broken promises of the benefits far outweigh the costs of dishonesty. That's why some companies or wealthy individuals do not want pay money back. All of these has inspired a sense of default probability.
·3.3.2 Imperfect self-management mechanism of commercial banks
Long-term management system of commercial banks is unreasonable, and the system is not sound. Over the years, the size of the planned economy of credit in useing is purely according to administrative regions and local economic development indicators. Credit assessment of quality is not high, strict examination and approval. Loan companies in the market position and development prospects, corporate credit status of the investigation was not thorough enough examination and approval system only in the analysis of statements and words. For a long time, banks had not established an effective monitoring mechanism, that is not achieved true sense of the separation system of loan approval. Commercial banks are re-loan-to-light tube, and right after the small business loans track and inspect the use of loans and business benefits.Banks do not detect signs of the breeding of non-performing loans. Companies can not be promptly take appropriate measures and countermeasures to reduce non-performing loans.
·3.3.3 lack of scientific method of risk control
Commercial bank's internal risk-control method is not scientific. In Western developed countries, there is not only a more scientific method of risk control in most of the commercial banks, but also more authoritative professional credit rating agency which credit rating companies on a regular basis. On the present stage, China's financial institutions is still in the initial stages of development. Credit ratings still rely on the expert Criterion-based qualitative analysis tool, and advanced modern credit risk measurement models have not yet applied them in our country. This qualitative method of risk control will largely influened on by man-made factors, and there is no uniform standard. There are alse som defects in the system.
·4 The General Situation of China's Commercial Bank Credit Risk Control and Prevention
Along with the accelerated process of global financial integration, commercial banks are facing increasingly complex business risks. These risks not only affect the operating results of commercial banks, but also determines the survival of commercial banks. Behind those bank risk that can be seen , there must be some hidden potential risks exist. Moreover, with the economic reform and accession to WTO, globalization is growing .The banking industry face many new and unprecedented risks in return. How to understand these potential new risks and how to make a reasonable response plays a important significancant part on the maintenance of stability and economic security of the financial system .#p#分頁標題#e#
·4.1 Analyse the loan before the credit options
We can look at enterprise legal personality to prevent moral hazard. Most of our SMEs are controlled by the actual person. This means that the right to a high degree of concentration, and the actual person who in charge of the conduct directly affects the possibility of loan repayment. Most of the banks’ non-performing loans appears with the borrower's malicious evasion of debts inseparable. Therefore, the survey of actual person in charge of the character is of the most important step before loaning. The investigation mainly denpend on credit investigation, conduct investigation and integrity of the investigation to realise the character of people who in charge of enterpris.
Obsearving the managemant of the enterprise ,we can prenvent the operational risk . It is surveys and analysis of enterprise reporting that we can use to master the management of small and medium enterprises. First, investigate the compatibility of materials accounts, including assets, liabilities, business and other aspects. Second, the analysis. First, by ratio analysis, analyzing solvency of enterprises, operating capacity and profitability. Second, we shuould analyse comparativly. Compared to more than two consecutive years of financial data banks can analyze customer business trends. Mainly depends on the balance sheet, comparative analysis of assets, liabilities, equity program trends. Obsearving the income statement, the bank can find the revenues, costs, expenses trends.
In order to prevent the risk of repayment, we also can analyse the corporate cash flow. Fourth, make explicit the reason why the net cash flow and operating cash flow net balance changing .The key players here is structural analysis, analyzing the internal structure of cash flows, different operating cycle management, investment, financing three pairs of net cash flow contribution. Ratio analysis, the bank should analyze client's solvency, operational capability and profitability. Trend analysis, the bank should also analyse that operating cash flow and sales growth is the ratio between the two movements. The increase was primarily due to cash inflows or the money withdrawn from circulation to accelerate sales growth. Increase in cash outflow was due to the increase of sales or inventory backlog, cost huge increasing. When cash inflow and outflow rate of growth is consistent, cash flow growth is stability or not.
Bank guarantee will have to see the compensatory ability. Enterprises by way of security is also the focus of the investigation. Because it determines if a borrower units in the emergence of the risk situation, how to ensure the security of credit assets. Here we need to focus on the first is ensuring security. To guard against security risks, in the investigation, the guarantor should pay attention to the subject qualification and the secured credit status of enterprises and guarantee capacity. Second, collateral, collateral investigations focu on the legitimacy of the full degree of collateral, collateral liquidity and the reasonable of collateral valuation and the proportion of mortgages.#p#分頁標題#e#
Banks have to conduct a comprehensive analysis of the loan and then determine whether loans. Determining whether to conduct lending, banks need to judge the composite indicator and determine industry trends and analyze cash flow. At the same time determine the loan amount, term, interest rates and repayment methods. SME loan before the survey is an important credit management procedures and links, but also a complicated process. Loan before the investigation is directly related to the quality of loans pros and cons of the decision-making right or not. So the most important thing is to "four to see a judge" found during the survey questions reveal risks, the first hurdle put in a good loan. For different enterprises in different survey methods, not stereotyped, rigid, it is necessary for enterprises to another, and earnestly strict loan-based survey conducted before the "fire wall".
·4.2 Analyse the loan in the credit options
In the loans, banks are required to break the credit decision-making and allocate tasks reasonably.
In the past,it is experience that decide whether to loan or not. Experience in decision-making is that banks make decisions by virtue of the manager's experience and intuitive information, and it belongs to the scope of qualitative decision-making. As the commercial banks continuing to learn from the West in modern decision-making methods, China's commercial banks are mainly denpend on the use of various mathematical models, such as forecasting models, linear programming, decision-making models to conduct quantitative analysis of credit decisions. This quantitative analysis is mainly manifested in the object of credit, loan qualifications and limits. Judgments on the basis of the judge is provided by the analysis of borrower's financial statements.
At present, China's commercial banks to loan the main confusion lies in that it is difficult to find the balance between the decision-making authority and decentralization. It is a two-lane that the state-owned banks are now managing the credit system. Its summary procedures are as follows. Enterprises apply for the loan to the bank's corporate business unit. Department of Business Enterprise and its projects investigate and write a written assessment report. Risk Management Department establish a due diligence investigation team to evaluate the company's business, and then submit the evaluation results to the Risk Committee. Risk Committee will discussed the result. If the result is passed, the enterprise can loan successfull. In excess of authority (say 10 billion yuan or more), branches report to the head office. The head office also have to go through the same procedures. Same time, the loan rejected by the Risk of the Committee may also request reconsideration.
·4.3 management analysis after the Loan
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Banks not only have to strengthen the post-loan management, but also strengthen the management measures.
·4.3.1The commercial banks should define their responsibilities clearly and held accountable strictly.
First,various departments have a clear post-loan management responsibilities. Customer sector is the implementation of departmental post-loan management, and credit risk management is a department of post-loan management control. The relevant departments must fulfill in order to form a post-loan management of the force. Second, various positions should have a clear post-loan management responsibilities. Risk managers, mainly depend on online real-time monitoring of customer credit and post-loan management of client departments. And then they publish the risk analysis.commercial banks Should focus on risk control, risk analysis, risk warning and risk prevention. Account Manager is responsible for customer monitoring loan after the inspection, guarantors, and collateral monitoring, risk classification,and should focus on the customer's routine inspections, warning risk early, collecting customer data, maintaining customer relationships. Third, hold accountability strictly. He who caused by increased risk or loss of credit assets must be held responsible for the corresponding responsibility.
·4.3.2 Banks should strengthen inspection and monitoring system and establish the post-loan management layer.
First, account manager should be made the main person responsible for the post-loan management clearly, and be responsible for daily management and loan after the inspection. Second, banks are required to present studies on the dangers of the key customers and direct marketing clients to implement the expert management. Headquarters must organize credit management department of the client departments to inspect the post-loan management, supervision and guidance .Third, risk managers should combine on-line monitoring with on-site inspections. They should increase the frequency of on-line monitoring and on-line monitoring of the content. Client Manager implement the post-loan management content and assess customer credit rating and check the collateral management. Fourth, auditing, regulations, accounting and other departments should link together to inspect. Audit department make sure whether the existing system is operating and whether regulatory content is comprehensive and whether rectification is just in place, such as the implementation of the restrictive provisions of supervision. Accounting department major inspect rights of custody certificate and review the loan documents.
·4.3.3 Commercial banks must grasp the risk control points and establish a risk early warning mechanism.
Science and effective risk early-warning signals detect the potential risks of customers and the risk early warning help response rapidly. And retreat can effectively resolve the security risk and protect their credit assets. In practical work, banks must grasp the five risk control points. The first line of customer return money withdrawn from circulation monitoring the situation can be promptly reflected in the customer's operations and to predict the possibility of maturity, ability to resume lending. Second, that an analysis of customer sales revenue is true or not can predict trends in customer market share. Analysis of cash flow statement determine the short-term solvency customers. Analysis of the profit indicators can measure the customer's business situation and profitability can predict customer development prospects. Comprehensive analysis not only help to judge whether business activities is normal, but also can determine the adequacy of the first source of repayment. The third is to ensure that security guarantees should be regular analysis of the effectiveness and security capability changes. Pairs of collateral should be on a regular basis on-site verification, monitoring collateral intact, the market price changes, the possibility of realization to determine the adequacy of the second source of repayment. Fourth, there should be a conscious understanding of a client manager personnel conduct and personnel changes. Fifth, post-loan management of credit for major account manager to implement AB corner mutual supervision and mutual restraint, and client managers review the work of post-loan management, cross-examination, slice rotation measures to control and prevent moral hazard.#p#分頁標題#e#
·4.3.4 Commercial banks are required to regulate the credit records management.
Operating line of credit should be to establish a unified repository and unified management of archives, the office without leaving the credit file. The inner workings of credit information is only compiled by the credit management department to .The client manage compile the legal documents, customer base, data, post-loan management of information and so on. Client departments designate prefessional person to manage and archive regularly.
·4.3.5 The commercial banks should earnestly implement the post-loan management system.
Agencies at all levels of credit personnel should take the initiative to carry forward the fine traditions. A highly responsible attitude and seriously do a good job after loan supervision, in order to prevent risks, to create conditions and to provide scientific decision-making. Senior management should pay attention to the lower-level institutions from time to time in the supervision and inspection in order to understand the loan after the management. The credit evaluation of grass-roots organizations included in the daily management can promote grass-roots sector to focus on the daily management of the credit. At the same time making full use of current information technology and network advantages, can establish a relatively perfect credit customer's business analysis system. This can enhance the information feedback and decision-making, so that post-loan management work has become more standardized and scientific, and strengthen risk prevention in advance and predictability, and promote scientific decision-making.
·4.3.6 The necessary accountability system is also an indispensable.
In accordance with relevant national financial policies and related financial regulatory approach, clarify the specific levels of routine work and the responsibility for the work. To be severely dealt with severely because of illegal operations, illegal lending, and supervision claims resulting from the loss of poor. We should cobined first-line loan officers and management of staff performance with reward .With a rigorous accountability system constraints related to personnel to realize the effective management of existing credit assets.( Vice President of Anshan City Commercial Bank:Wei Huan)
·4.4 Several international means of advanced information management technology
Foreign commercial banks attaches great importance to the use of risk management model in credit risk management. In credit portfolio risk management and measurement, the foreign commercial banks have developed a number of advanced models. JP Morgan developed the credit CreditMetrics model which is based on credit default rates and the level of the advanced model of the transfer matrix. Credit Suisse First Boston announced CreditRisk + model which is based on credit default rates and default rates volatility models. They are both from the perspective of bank assets to measure the overall risk. Among them, the former also used advanced VaR techniques. The domestic commercial banks should learn from the advanced model. And the initiate on the basis of actual needs and establish their own risk management models.There is no doubt that this is a long-term and systematic project.#p#分頁標題#e#
The New Basel Capital Accord proposed two types of approachs to credit risk. One is standard method, and second is IRB. Standard laws to the 1988 Capital Accord is based on an external rating agencies determining risk weights, so the use of targeted are low complexity bank. In contrast, high levels of risk management banks can use internal ratings. But the commercial bank's internal rating system must be science. Basel Committee believes that the risk of a capital closely linked with the benefits of the system will be far exceed its costs, and the result is a safer, more robust and more efficient banking system( John Authers ,2010). After a few years, many international banks will have adopted the IRB. If China can not keep up, will be at a disadvantage in international competition . After the transition period, the IRB which can not use the commercial banks in international financial markets will be at a competitive disadvantage.
According to the complex situation of the banking sector, a number of innovative risk and capital measurement methods were established in Basel II. These methods solve the problem that the old agreement is too rigid and unfair, and the new agreement is more instructive and practical. When measuring the credit risk, we mainly take the standard method and the IRB.
The Standard Method
Credit object Risk weight (unit:%)
AAA～AA- A+～A- BBB+～BBB- BB+～BB- B+～B- B- Not rated
Governmen-t 0 20 50 100 100 150 100
Bank 1* 20 50 100 100 100 150 100
Bank 2** 20 50 50 100 100 150 50
Bank 3*** 20 20 20 50 50 150 20
Company 20 50 100 100 150 150 100
Notes：* Bank registered under the national sovereignty of a risk weight rating categories (from AAA to BBB)
** Foreign rating agencies based on the assessment of the bank
*** The following short-term loans for three months
·5 the recommendations of Improving the credit risk prevention
At present, the People's Bank credit database has been established more than 600 million individuals, 6,000 million more than 10,000 households and 1,700 business credit file. The legal basis and standardized system has been formed in Credit industry. The People's Bank of China credit has been established as the credit owners to manager(The Vice President of People's Bank of China Zhu,2010 ).
·5.1 Improve the customer credit information system
In general, the personal credit information system is defined as that according to the income and assets of the residents, borrowing and repayment, credit facilities,the punishment and lawsuit when bad credit occured, the banks evaluat the individual credit rating and keep records. The commercial bank largely denpen on personal credit decide whether to provide loan or how much to provide. In fact, it is an inevitable requirement that China create a credit system when it is changing a planned economy to a market economy. By removing key barriers to credit in financial services, we can start the consumer market, and expand domestic demand to stimulate economic growth.#p#分頁標題#e#
The reason why central banks actively establish and improve personal credit information system is that if personal credit information system is imperfect, there will be a lot of hidden dangers on China's economic construction and the development of the financial industry. On the contrary, personal credit system construction of China's financial ecology is an important step to help commercial banks manage credit risk and maintain financial stability and promot financial development. For example, the existence of the "fake mortgage" phenomenon is one of individual credit risk in individual housing loans. In fact, there are many cases like this, such as bank cards. If we enable Personal Credit, commercial banks can help credit effectively avoid conduct that false mortgage risks(Shanghai Seceurities News,2005). It is reported that there are many commercial banks have begun to query the database for the payment of personal credit loans for personal consumption constant review process. This shows that individual credit database will play an important role in preventing individuals in the commercial bank credit risk and promoting the development of consumer credit business（Financial Times，2007.）
With the consumer credit business becoming a major business and the commercial banking profit sources, the personal credit information system construction and improvement will help to eliminate constitutes personal consumption and other bottlenecks in the development of personal financial services. In accordance with the central bank's statement, with the individual credit database gradually put into use and further improve, regardless of any person anywhere in the country, no matter in which commercial bank they leave borrowing and repayment records , commercial bank credit review officer can query information in a written authorization by the parties. In this sense, the establishment and improvement of personal credit information system which is led by the central banks , not only can promote the development of banking operations and reduce personal financial risk, but also stimulate consumption and promote economic growth by promoting the integrity of individual consumption.
·5.2 A uniform regulation of business processes loan
·5.2 A uniform regulation of business processes loan
Commercial banks, especially the four state-owned commercial banks, are widely accused for inefficiency and too many links. In fact, the improvements in credit risk management is one of the most significant improvement in state-owned commercial banks in recent years. These banks have adopted credit management system of the separation of approval and lending, collective trial goods, and hierarchical authority. At same time, the introduction of credit ratings, credit assessment, customer credit, loan classification and other credit management tools are just around the coener. However, here is lack of coordination and integration of science between the various systems and methods. In other words, while risk management is strengthed, credit business process chain extended. It is more and more nomal that departments and staffs do not know what's they responsibilities .#p#分頁標題#e#
In 1999, the Bank of China issued "a uniform credit system for commercial banks" Guidelines, and commercial banks were the implementation of a uniform credit system. However, due to the biased understanding of the unified credit , there are also some problems in the centralized control of a single customer credit risk.
To the point of the business formed, commercial banks' operation flow can be divided into direct business processes which create value by serve customer and activities to create value for the direct service of back office processes. According to the current customer service processes which provide customers with products and services, business processes can be divided into credit, retail business processes, balance-sheet business process, business process consulting, agency and other business processes. Back office process management activities can be divided planning and finance processes, risk management processes, product development processes, logistics processes and so on. Even in the middle of business, credit is the core of the business. The efficiency of the credit business process directly determines the competitiveness of the banks.
The recycling of the Bank can be divided into business process reengineering, organizational structure and business recycling recycling(China financial net ,Feng ling Chen,2009). BPR mainly focus on the banks of the integrity and the particularity of customer demand, to change the traditional division of labor, to reduce the middle management of the review and to share the specialist knowledge and decision-making information. Reengineering is the organizational structure of banks which is based on network technology, to change the traditional hierarchical structure, to establish a flat organizational structure, to strengthen the capacity of the head office of the business processes and information control capabilities. Business recycling refers to that the bank's business process reengineering and organizational structure of banking institutions extend from the internal recycling to various financial institutions .In the entire financial sysem,the bank re-combine resources, and re-find their competitive advantages. In this series of process, business process transformation is a basic stage. the core of the transformation of the credit business process reengineering has become a fundamental part of banks.
The basic link of the credit process reengineering is to achieve electronic processes and the scientific management in information flow. The implementation of electronic processes ensure the staff complete standardization of the various business aspects of information gathering. Establishing a new market-oriented and customer information management system, each level can enter the databasebe based on their permissions. This greatly improve efficiency and support frontline departments to provide customers fast and efficient service.#p#分頁標題#e#
The core of the credit process reengineering is the process of integration itself. First is the introduction of competitive credit products, and eliminate unprofitable products. At same time, with outsourcing and strategic alliances, the banks can extend some process which is lack of internal resource allocation outside of the organization. The second is to strengthen the logical relationship with the research process, and achieve the effective integration of business processes.
·5.3 Strengthen post-loan management work
To enhance the post-loan management, the banks should focus on the credit management .
·5.3.1Eliminate the Misunderstanging of the Post-loan Management
In terms of ideology, the banks needs to correct the misunderstanding of post-loan management. The Post-loan management working as a precautionary, the bank should pay a great attention. Credit checks, it is necessary to check the program, but more attention should be paid to the results of the review. There should be a designated person responsible for post-loan management work. In each credit companies, banks must have special staff responsible for post-loan management work. The establishment of penalties and rewards incentives is very important, and rewards and punishments should be strictly examinted.
·5.3.2Establish a Sound Management System
The check after the loans plays a great role in the post-loan management. The constructed of various inspection system, can effectively manage a variety of loan work. Establishing a post-loan management system, we can pick solutions to new situations arising in post-loan management timely. The bank focus on the sustainability and reliability of the first source of repayment, and the integrity and security analysis of the second source's repayment. Analysts point to credit risk of the assets accuratly, and provide propose measures to prevent and resolve the risk.
·5.3.3Improve the professional skills of staff
The banks need to strengthen the professional training post-lending staff, and raise the management level. With the deepening of economic reform, market economic activities, business features, profound changes have taken place. The credit risk become more complex, which requires post-loan management staff to have strong financial, legal, accounting and other related knowledge. The staff should not only review the financial situation of enterprises, but also concerned about the management of enterprises, foreign investment, and all the cash flow. Risk managers also should pay they attention from a business to the whole industry and market changes. In the micro analysis system which is based on the risk of carrying out research, the bank can prevent and reduce credit risk.#p#分頁標題#e#
·5.3.4Directly involved in the customer's post-loan management
In order to timely identify problems and improve the quality of post-loan management，credit management person need to be involved in some of the customer's post-loan management directly.
The credit managers not only to promote the client manager to strengthen the post-loan management in accordance with the relevant provisions and assess the quality client managers' post-loan management, but also to check directly with the client manager. The customer that Credit managers should be directly involved in the on-site inspection after the major credit belongs to the following categories. Risk Management Department under the control of information that the customer-owned industry, industrial policy, the customer's organizational structure, such as primary products or major changes in financial position and may repayment of bank loan assets have a greater negative impact of customers. He who has been classified as five categories and the following customer concerns. Credit approval require the person who is under the supervision of the customer focus, and so on.
·5.3.5Solve the problem timly
To solve the identified problems timly will resolve non-performing assets in the cradle.
When we timely detect problems, we must also be timely to take effective measures to preserve credit assets, to avoid or reduce losses. In this way, we have first mover advantage. Any hesitation on the identified problem may lose the opportunity. In order to account Manager to supervise the timely detection of problems, e may make bad loans accountability measures.
·5.4 how to tranfer risk
Commercial banks often face a variety of risks in the course of business, of which credit risk is essential, and it is also known as default risk. Since the 90s of the 20th century, credit risk has become the most important risk the banking industry has face. It is related to the survival of banks, and the banking institutions and their regulators are most concerned about it. The root cause is the credit risk of default or business failure of the Parties. The borrower can not repay the loans plus interest. All principal and interest from bank loans can not be recovered or be able to recover part of the loan principal and interest and the bank have to bear the loss. World Bank research on the global banking crisis show that the poor management of credit risk is a common cause that lead to commercial banks failures. The prevention and control of credit risk problems is a major reason to explain the outbreak of the Chinese financial crisis.
Credit derivatives are appeared in 90 years of innovative products credit risk management. These years, the developement keep a high pace. Following the financial crisis, a series of financial events in recent years led to turmoil in global capital and securities markets ,so that people interested is boiled over in the credit derivatives. Before the birth of the credit derivatives, credit risk and market risk are often combined. None tools can hedge against both credit risks and market risks. Before the emergence of credit derivatives, financial institutions can only rely on the internal management of the original or the diversification spread credit risk hedging through the market to resolve. The biggest feature is the basis of the assets remain in the table, but the credit risk from market risk are in the separation and provide risk transfer mechanisms. Compered with the previous credit risk management tools, it is a separate trading of credit derivatives credit risk. It can reduce risk exposure without disrupting the customer relationship. It is known as most important financial innovations in the 20th century.#p#分頁標題#e#
Credit derivatives include credit default swaps, total return swaps, credit spread products and credit linked notes. On this basis, it can produce many variants. In addition to traditional credit derivative nature of financial derivatives, it show different characteristics. The first is great flexibility. Object in the transaction, duration, amount, etc., it can form a special product to meet customer needs. The second point is a good privacy. Banks do not directly face the other derivative transactions, and it maintain the confidentiality of customer records. The above make it possiable that without damage good relations between banks and borrowers, while the banks can manage credit risk loans. The third point is the invariance of the debt. Credit derivatives transactions with corporate debt as the object of credit derivatives and processing is just the structure of the debt component of the original debt obligations between the law has no effect. The fourth point is the strong tradable. Credit derivatives overcome the weaknesses of traditional credit insurance and credit risk achieve a market-based. Commercial banks are the main participants in credit derivatives. Current credit risk has been transferred to the other financial institutions. Insurance companies, pension funds, corporations, mutual funds also became involved in the credit derivatives market.
·5.5 Activities to improve credit information symmetry
Although some commercial banks in China have established credit management information system, the information in terms of comprehensiveness and the fully functional are far from standard. We need to work on the following aspects. First, with special forces uniform collecting information , processing, updating and managing. The establishment of the Bank united credit management information system can effectively improve information symmetry. It is very important for higher line of credit know about the lower row, and the credit bank loan officer come to understand the work. Second, we must expedite the implementation of credit business network. All credit must go through the whole line of the internal network and full line of credit business information network. This makes it easy to grasp the lower line of credit risk profile of assets, and thus achieve effective control of the lower levels.
Depth analysis of the information on the CMIS would be a more complete risk information disclosure. This help prevent the development of credit before making the adverse selection and the risk of moral hazard after credit. The basic data and information of CMIS does not directly reflect the degree of risk, and only by establishing a mathematical model for in-depth analysis of the underlying mathematical basis of the data and information, can the risk be more fully reflected.
Arrangement of the two systems are easy to banks to know about the financial situation before and after corporate loans, the actual operations and the use of credit funds. There is no doubt that it improve information symmetry. It is also conducive to bank lending to enterprises before the review and credits after the supervision. It plays an important role in preventing adverse selection and moral hazard.#p#分頁標題#e#
·6 think in the context of the domestic economy
For a period , the whole of China will maintain rapid and sound macro-economic development momentum. In good operating environment, the banking sector will continue to show good growth. Profits remain optimistic, and the management ability is expected to enhance. With the changes in domestic and international situation, the banking sector have accumulated risks for a long-term, and new risks is emerging.
·6.1 the innovation
The basic credit derivatives products include credit default swaps, total return swaps, credit spread products and credit linked notes. On this basis, it can produce many variants.
credit default swap
Credit default swaps is the most widely used in credit derivatives market.The buyer of Credit default swap ask for protection for the loss of assets which is caused by the credit event and transfer credit risk.
credit-linked note
Credit linked notes are actually the securitization of credit default swap form. Credit Linked Notes are securities. The buyer pay the interest rate bonds to seller. At maturity ,if the pre-agreed credit event does not occur, the corresponding credit protect the assets side only pay face value. If the event occur , compensate the protection of credit linked notes.
Credit spread option
Credit spread is compensation for the underlying asset to investors the risk of default but higher than the risk-free interest rate spreads. The formula is,Credit spread = loans or securities credit spreads benefit - risk-free securities corresponding benefit. Credit spread call and put options into options. According to the corresponding provisions of the agreement,it allows the buyer at maturity can unilaterally choose to pay or not pay the pre-agreed spread.
China should gradually establish a government-led personal credit guarantee system. Because of the lack of adequate collateral means, it is very difficult to choose effective forms of collateral when the borrowers apply for credit and commercial bank is difficult to implement effective risk protection for consumer loans. Therefore, in order to enhance the ability of residents GCL, this paper proposes a mechanism which is initiated by government agencies.
The personal loan interest rates should gradually realize the market. Based on the following reasons, consumer credit business should realize different credit ratings and different interest rates progressive. First, financial market development and innovation have greatly weakened the effect of interest rate controls. The marketization of interest rates is the general trend of China's financial reform. Second, because of the lower of uncertainty of individual credit transactions , the cost of its avoidance of debt are also largr. Therefore, As a relatively small risk financial product, personal consumer credit market interest rates may be given priority to try to reform. Third, a nationwide personal credit information system has provided technical support for the progressive realization of the personal loan interest rate market .#p#分頁標題#e#
·6.2 The domestic economic situation and the exposure of bank's credit risk
In the default state, in order to estimate the value of assets or loss, the bank need to determine the risk of exposure to different financial products size(Alvin Ling，2003). In accordance with the "New Basel Capital Accord" requirement, for table service, default risk exposure is equivalent to the name of loans denominated. In meeting the conditions provided by the standard method, banks can form a company with loans and deposits for netting. In this way, the bank reduce the default risk exposure. For the balance-sheet business, we need to deal with two class of business separately. First, using models that are uncertain in transactions such as loans and revolving credit commitments. Second, we should deal with foreign exchange, interest rate and equity OTC derivatives contracts carefully. In addition, to calculate the default risk exposure should be net of bank assets on a special reserve extracted.
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