Research On Credit Risk Management Of SME Lending Of China's Commercial Banks

The important foundation of China's stable and rapid economic growth is small and medium-sized enterprises (SMEs). The role of SMEs on economic growth, expanding employment, technological innovation, economic restructure and other aspects becomes increasingly prominent. But at the same time, the financing of SMEs is already a long-term international problem.As the main body of China's financial system, driven by competitive pressures outside and profit force inside, Commercial banks have also begun to expand SMEs'financial business. However, the trial is not smooth going, just because credit risk of SME lending becomes a "stumbling block" in the business transformation of commercial banks. In this background, it is an inevitable choice for commercial banks who want to expand SMEs'financial business that how to manage credit risk of SME lending scientifically, rationally and effectively.The theories of risk management and Basel II provide the foundation and framework for the research of credit risk management of SME lending. Taking traditional management experience of loans, China's commercial banks set dynamic mode of credit risk management of SME lending that "investigation before releasing a loan", "review in the process of releasing a loan", "examination after releasing a loan" are the main contents.It is admittedly indispensable that Commercial banks establish the basic mode of credit risk management of SME lending. It has made certain achievement. However, problems and drawbacks should be taken seriously, such as unreasonable Risk Management Organizational Framework, poor Credit Rating System inside, unscientific Risk Pricing Mechanism, imperfect Early Warning and Information Feedback Mechanisms. Through objective analysis, the paper thinks that problems and drawbacks are caused by macro environment, small and medium-sized enterprises and commercial banks.Finally, by theoretical and practical analysis, the paper proposes five recommendations of credit risk management of SME lending for commercial banks:improving Internal Management System, constructing Internal Credit Rating System for SME lending, establishing scientific Risk Pricing Mechanism for SME lending, designing and improving Early Warning Mechanism and strengthening co-operation with external agencies. The paper also gives practical measures for each recommendation. Such as, the paper holds that, in current credit situation, given it is difficult to commercial banks to construct accurate Credit Risk Measurement Model, they may build Scorecard Model for SME lending, and analyses it by an example.