Research On The Effectiveness Of Risk Supervision Upon The Commercial Banks

The commercial banks are facing increasing competition with foreign banks since China became a member of WTO in 2001, but asset quality of the commercial banks hasn't reached regulatory requirement yet. Among the problems, the effectiveness of risk supervision upon the commercial banks is an urgent issue. This paper mainly focuses on the way of effective risk-control upon the commercial banks . The key analysis and discussion on this question rely on two methods. First, China Banking Regulatory Commission(CBRC) can supervise the risk of the commercial banks by the way in either Off-site Supervision or On-site Supervision. Second, risk control department within the commercial banks can join the process of bank management in a much more extensive scope and deeper degree.In this paper, two main institutions and their functions are to be analyzed, one is relevant regulatory authority, China Banking Regulatory Commission(CBRC), the other is risk control department(RCD) of the commercial banks. Without CBRC's direction, the incentive and goal of risk-control within the commercial banks might be indistinct and muddled; without RCD's involvement and efforts, the risk around the commercial banks can't be controlled either.In the evaluation of effectiveness of risk supervision to the commercial banks, economic environment and financial situation should be taken into account through the whole process. Nowadays, to a great extent, the well-balanced performance of the commercial banks means the effectiveness of risk supervision upon the commercial banks. Because of the problems related with supervising methods, risk control system in the commercial banks still need to be much more enhanced., and the top priority is to make the problems of authenticity of information and regulatory policy to be resolved. The main viewpoint of this paper includes: (1) In the process of introducing advanced risk supervision methods from Western countries, the adaptation to the national situation in the most degree should be paid more attention; (2)The role of RCD in the SCBs should be adjusted from stander-by to background of operation department, so RCD can participate in the process of operation and control the procedural risk directly; etc.