Study Of Chinese Commercial Banks To External Risks

The operational risks of commercial banks are highly related to the external environment, especially in the transitional economy. During the China's 30-year reform and opening-up period, Chinese commercial banks have taken huge costs to support china's economic reform and their risk management systems are facing great challenges. Since 1998, Chinese government has supported commercial banks'IPO, the introduction of strategic investors and ownership reform to speed up Chinese commercial banks'ownership reform, by capital injections and twice large-scale removal of non-performing assets. When summarize the reasons of the forming of non-performing assets in china's bank industry, past researches always focus on the periodical drawbacks of the internal risk management system, and underestimate the external influence from its historical condition and realistic systematic factors. With the integration of Chinese economic and financial system into the external world, foreign financial crisis's influence on china's financial system is becoming larger and larger, so that people pay more attention to the social basis of the maintaining of china's financial system's safety and stability.Based on such background, this paper tries to analyze the external risk environment of Chinese commercial banks, hoping to provide some thoughts to government on political and economic reform as well as the improvement of commercial banks'risk management mechanism.This paper includes three parts: the first part is introduction, which introduces the targeted problem, background, clarifies research range, and chooses the research basis for this paper; the second part includes chapter 1 and 2, which introduce the theoretical review and foreign empirical research to build up theoretical framework and empirical basis for the later analysis; the third part includes chapter 3, 4 and 5, which discuss the external risks Chinese commercial banks are facing from both domestic and international point of view, including characteristics, reasons, and trend analysis, and also put forward the suggestions on how to build up proper governing framework for Chinese financial orders and prevent the external risks.The detailed arrangements are as follows:Chapter 1 mainly reviews the related theory on banks'risk, analyzing financial risk's traditional theory, financial eco-theory, neo-systematic economics, and transitional economics to build up theoretical basis for this paper.Chapter 2 starts from foreign banks'non-performing assets, introducing the reasons of external risks and solving practice in America, Japan, East Asia, Latin America, etc. And then analyzes the international cooperation mechanism and regulation on preventing and controlling banks'non-performing assets, which is the component of the foreign reference of this paper's research on Chinese commercial banks'external risks.Chapter 3 analyzes external operating environment's influence on banks'non-performing assets and related different opinions. First, reviews the related statistical data and typical cases about the removal of banks'non-performing assets; second, based on the analysis of the reason of domestic banks'existing non-performing assets, points out the quite strong relationships between non-performing assets and past economic system, and concludes that the reason why Chinese commercial banks are hard to get rid of administrative intervention is because the Constitution has no clear regulation on the edge of government's economic intervention power; at last puts forward initial tentative plan of the new orders of Chinese financial governing, which should be democratic, multi-level and monitored by people from all works of life.Chapter 4 analyzes the external risks faced by china's bank industry, under the china's opening-up condition. First, describes and analyzes the financial globalization challenge faced by Chinese commercial banks'international operation; second, analyzes the mechanism of bringing risks by international capital flow under the modern financial liberalization, and analyzes the challenge faced by Chinese commercial banks brought by international capital flows empirically; at last, analyzes several origins of commercial banks'foreign exchange rate fluctuation along with the international foreign exchange rate fluctuation, and analyzes the challenge faced by Chinese commercial banks caused by international foreign exchange rate fluctuation empirically, especially RMB exchange rate fluctuations.Chapter 5 is the concluding remarks. Based on the summary of the whole paper, put forward suggestions on how to improve banks'both external and internal operating environments. As to the domestic external risks: suggest that we should change government's way of performance appraisal, re-clarify the edge of government's economic function, and set the maintaining of financial stability and safety as one important appraisal criteria; change the National People's Congress-centered legislative committee into Constitution court, monitoring government's operation and unconstitutional acts, and maintain the constitutional order and dignity; set up financial court to handle financial cases, re-explain the priority of mortgage debt, and strengthen the protection of financial debt; make full use of the power of social organization and media, regulate and improve the information disclosure of financial institutions regularly. As to the foreign risks: suggest that we should set up multi-level system for international regulation and financial communication, participate in promoting the reform of international financial organization and regulative organization actively, to set up more fair, democratic, and proper international financial orders.The main conclusion and innovation of this paper include:1. By applying domestic and foreign theory on financial risks, including financial eco-theory and transitional theoretical analysis of the forming factors of Chinese commercial banks'non-performing assets, this paper points out that external environment including governmental behaviors are probably the main reason for the forming of Chinese commercial banks'asset risks. In order to solve the problem caused by government administrative intervention, we need to set up constitutional court to monitor and regulate government's unconstitutional behaviors, such as Local protectionism, etc.2. The inefficient protection of Chinese financial claims is not only related to the over-consideration of stability and other political factors by government, but also related to the backward compared to the foreign active legislative value which protects the mortgages right first. Active financial claim protection measures are good to promote economic development, provide opportunities for more fair and efficient anti-unemployment and increase of social welfare. To strengthen financial claims protection, it is necessary to set up financial court.3. To strengthen and improve financial regulation, it's necessary to set up the National Financial Stability Committee and Financial Regulation Committee of the highest level, change the current separate regulation to integrated regulation, and promote international financial cooperation efficiently while improve the efficiency of domestic financial regulation.During the composition of this paper, because of some limiting factors, such as the writer's knowledge volume and structure, energy, time, data availability, etc, this paper's research on Chinese commercial banks'external risk environment is not deep enough. There are also some further issues which are the main contents of the writer's future research, such as research on the legislative foundation of bank's claim protection, research on the clarify of the edge of government's intervention power, research on multi-level financial regulation, etc.