A Study On The Internationalization And The Risk Management Of The Credit Card Business

Risk management is the important aspect of the development of credit card business, and risk management directly affects the overall level of the profitability of credit card business.Credit card business is a business of operating money by credit card as the carrier, has the function of credit and the payment function, and is a product of personal consumption credit business developing to a certain extent. Compared with the business of the traditional personal consumption credit, credit card business has the characteristics of the high profitability and flexible credit form. Credit card business has originated in retailers offering shopping vouchers, is experiencing the era of commercial credit cards and the common development times of the commercial credit card and the bank credit card, which has been dominated by the bank credit card, and its profit pattern includes the operating profit pattern with which the main revenue is the interest income and the service profit pattern with which the main revenue comes from the business commission, and the service profit pattern is the special case of the operating profit pattern, and most of the credit card business and institutions operate by the operating profit pattern.The credit card business is the credit business with no physical collateral, and with high risk, so the risk management is crucial to the operation process of the credit card business. The risk management of the credit card business and the traditional sense of the risk management are different. The risk management of the credit card business not only has the traditional risk management function to ensure the normal and safe operation of the business, but also has the function of improving the profitability of the credit card business. At present the risk management of the credit card business has become the important way which can achieve and improve the profitability of the business, and the function which can ensure normal and safe operation of the business is one aspect to achieve and improve the profitability. Therefore, the risk management theory of the credit card business takes the profit maximization principle for a theoretical basis, takes the comprehensive risk management theory for the capital security, takes the price theory and the theory of the comparative advantage for the means of realizing the purpose of the management, takes the theory of the core competitiveness and international competitiveness for the development guide, sets up the overall goal and level target of the risk management, in order to realizes the final purpose of the risk management. To achieve the purpose of the business operation at the equilibrium of risk and profit, credit card business institutions must adopt a series of risk management measures to deal with different types of risk and loss from the risk aversion, the risk transfer, the risk diversification, the risk reduction and the assumption of risk, in order to achieve the ultimate goal of enterprise of the profit maximization and the aximization of shareholders’rights and interests. The internationalization feature of the credit card business is determined by the requirements with which the credit card business mechanism is able to realize the target of the profit maximization and the needs with which the credit card business mechanism is able to operate. The internationalization development of the credit card business is the inevitable trend and the stage achievemrnt, is not only necessary, but also feasible, and also requires certain conditions to guarantee the smooth development of the internationalization at the same time. Internationalization not only will become the main direction of the development of the credit card business, but also be able to promote the elimination of the certain economic and financial barriers among countries, and gradually realize the direct issuance of credit cards to foreign and overseas area. The risk of the internationalization development of the credit card business belongs to the general risk of the credit card business, and its measures are consistent with the measures of the general risk of the credit card business. Because the internationalization of the business involved in the domestic and foreign business communication, some risk phenomenon that has internationalization feature will produce. The risk management about the phenomenon of the risk with the internationalization feature also belongs to the category of the risk management of the credit card business, therefore also requires the management according to the philosophy and purpose of the risk management of the credit card business.In the process of the analysis and research on the risk management of credit card business and the demonstration on the view of the risk management of the credit card business servicing to maximize profit and shareholders’equity, the structure of the thesis is the summation, the study, and the final summation. The first chapter and the sixth chapter is the summation, and the second chapter to the fifth chapter is the study. The following is the written thoughts of each chapter.The first chapter is the summation that summarizes the main content of the thesis and has drawn the following content, This chapter focuses on the background and significance of the topic selection, the literature review, the research content and the research method, as well as the innovation and the deficiency. From on the whole, this chapter of the thesis elaborates the reason of the topic selection, the results and progress of the domestic and foreign research, the emphasis this dissertation studying, the setting of the chapters, and the research method this dissertation using, as well as shows the innovation and deficiencies of this article, and tries to give an overall concept and understanding through the research of this chapter.The second chapter is the risk management theory of the credit card business. The risk management of the credit card business is to maximize profit as the ultimate goal of the risk management, and in the process of the realization of the ultimate goal, forms a-number of sub goals according to certain standards and methods, as well as the vague generalization and standardization on the realization of the ultimate goal and sub goals form the theoretical system of the risk management of the credit card business. On the basis of the above, in accordance with the stepwise approach, the author is based on making the theoretical basis of the risk management of the credit card business clear, and starting from the basic content of the risk management of the credit card business, studies the theoretical basis and theoretical system of the risk management of the credit card business. Therefore, starting from the concept of the risk, this chapter studies the characteristics, types and quantitative prediction of the risk, then starting from the basic content of the risk analyses and researches the definition, characteristics and types the risk of the credit card business, and realizes the research from the generality of the risk to the characteristic of the risk. After the analysis of the basic content of the risk of the credit card business, this chapter begins to study the main content of the risk management of the credit card business. After the analysis of the general content of the risk management, this chapter made a comparative analysis and study of the risk of the commercial banking business and the risk of the credit card business. In the section of the theoretical system of the risk management of the credit card business, the dissertation analyzes and researches the risk management theory that whose essence is to achieve the maximum profit at the basis of the guarantee the normal and safe operation of the business. The profit maximization principle, the price theory and the theory of comparative advantage reflect and realize the essence of the risk management, the comprehensive risk management theory guarantees the normal safe operation of the business, and the core competitiveness and the theory of international competition ability ensure the development and the internationalization of the credit card business.The third chapter is the development course and present situation of the credit card business. This chapter analyzes and studies the developing history and current situation of the credit card business on the basis of the elaboration and the comparison of the concept, operation process, the source of the profit and the profit pattern of the credit card business by using a lot of data and charts. Based on the analysis of the source of the profit and the comparison of the profit pattern, this chapter studies pointedly the development process and current situation of the credit card business, and the current status of the international development caused by the development of the credit card business for the international market, searches for the profit pattern for the present international credit card business, tries to reveal the law of the high profit of the credit card business, and provides the reference for the development of the domestic credit card industry. According to the actual situation and development target of the development of the credit card business, it is concluded that the operating profit pattern with which the main revenue is the interest income is the optimal choice of credit card business institutions. According to the multi angle analysis of the development of the credit card business within the territory of China, it is concluded that the development environment of the credit card industry within the territory of China matures increasingly but there is quite a lot of space for the improvement, the loss rate of the credit card business is lower but the measures of the risk management don’t play a role of the increase in profits, and the concept of the risk management urgently updates and conforms with international and so on.The fourth chapter is the internationalization of the credit card business. Starting from the international features of the credit card business, this chapter analyzes the necessity, feasibility and implementation conditions the internationalization of the business, and the purpose of this chapter is to analyze and study whether the international section of the credit card business belongs to the general credit card business and is necessary to exist, whether the internationalization of the business is consistent with the concept of the risk management which is the concept of the realization of the profit maximization through the management of the operational risk, and whether the internationalization of the credit card business can be achieved. In the international development of the credit card business, it must be faced that are a series of problems and situations, including policies and regulations, the supervision regulation, the international practice, the economic and financial crisis and so on, which come from foreign and overseas countries and regions and are different from the domestic, as well as these problems, situations and their changes are potential risk factors. In addition, the policy, strategy and the business operation process etc. of the international development of the credit card business all belong to the category of the risk management. The risk management and the international development of the credit card business are inseparable. Therefore the analysis and research on the relationship between the internationalization of the credit card business and the risk management include the special position of the internationalization of the credit card business in the risk management strategy, the risk management to meet the basic requirements of the development of international business, the difference between the risk of the international business and the risk of domestic business of the credit card business, and the international development of the credit card business applies the concept of the risk management and make the risk management more complex etc.. The effect of this chapter lies in making it clear that the feature of credit card business is the internationalization, which is decided by the daily operation of the business and the profit maximization of the business objectives, and through the analysis, the risk management of the credit card business and the international business are inseparable. In addition, pointed out that under the control of the concept of the risk management, the degree of the internationalization of the credit card business continues to deepen and widen, and at the same time the risk management has to cope with the risk arising from the International competition.The fifth chapter is the risk of the internationalization of the credit card business and the measures of the risk response. The above content has mentioned it several times that the requirements on the business operation of the credit card business and its risk management include reducing losses, increasing profits, realizing the profit maximization, improving profitability, running the business at the equilibrium point of the risk and the profit, and in the business operation and the risk management, these form consciously or spontaneously requirements of the business operation and the risk management, formed gradually the purpose of the risk management of credit card business, and the measures according to this purpose are the main content this chapter studying. This chapter studies the purpose of the risk management of credit card business and the measures of the risk management, as well as elaborates the view that the purpose of the risk management is to seek the equilibrium point of the risk and the profit and run the business at this point, and the method for the realization of the risk management is the measures of the risk management. The measures of the risk-management include four steps that are the clear goals of the risk management and their stage goals, establishing the framework of the risk management, establishing the policy of the risk management, the measures of the risk response, in which the measures of the risk response are divided into six kinds of measures studied respectively that are the risk avoidance, the risk transfer, the risk dispersion, the risk hedge, the risk reduction and the risk tolerance. The measures of the risk avoidance include excluding risk factors by the use of the operational policy and exploiting the new technology and products. The measures of the risk transfer include the insurance and the outsourcing of the business. The measures of the risk dispersion include mainly the asset securitization. The measures of the risk hedge include the exchange rate option, the swap transaction and so on. The measures of the risk reduction include using the technology of the credit scoring, inquiring the credit information and auctioning the bad loans. The measures of the risk tolerance include extracting the reserve for bad debts, writing off bad debts and bearing the loss caused by the risk in the process of business development. In the measures of the risk response, the asset securitization aims mainly at the risk not leading to loss, the auction of the bad loans aims mainly at the risk leading possibly to loss, the extraction of reserve for bad debts and the bad debt write-off aim mainly at the risk having been identified as loss, and the technology of the credit scoring, the inquiry of the credit information, the exchange rate option, the insurance and the outsourcing of the business aim mainly at potential risk factors in order to avoid the risk event occurring. It is the need of the development of the credit card business and the embodiment of the operation for the risk preference. In addition, the internationalization is the feature and direction of the development of the credit card business. The internationalization not only expands the market of credit card business and introduces the advanced experience and technology, but also exists factors that restricts the development and expansion of the credit card business and may cause loss. Therefore this chapter also analyzes the main risk of the internationalization development, the international advanced risk management experience of the credit card business and the countermeasures from the aspect of the internationalization feature of the credit card business. In the process of the analysis, the author compares the international risk and its countermeasures and the general risks of the credit card business and their treatment measures, analyzes the risk category involved starting from the international risk phenomenon and finds the coping measures, as well as the international risk and its countermeasures are classified into the general risks of the credit card business and its countermeasures.The sixth chapter is the conclusion and suggestion that is the summary of this dissertation. This chapter points out the gap of the risk management of the credit card business between China and the international advanced level, prospects the foreground of the internationalization of the credit card business, and gets the main conclusion, countermeasure and suggestion studied by this dissertation.