China's Commercial Banks To Credit Risk Management

The credit risk has a long history in banking management and has been a hot topic in the international finance circle. In the past two decades, the shift from the traditional asset liability management to the overall risk management focusing on risk measurement and risk optimal has been the most outstanding change in the field of banking management. Because Chinese commercial banks and financial market are at the stage of emerging and transition development, the credit risk management in commercial banks has just begun developing and the approach of risk management is the most poor in Chinese commercial banks. With traditional financial analysis basing on static data of financial statements and the subjective judgements of credit analyst ,banks grant loan, however banks do not quantitatively analyze the credit risk of the borrower. On account of the poor credit risk management , the bank competitiveness of china falls behind western developed countries.So based on how to quantify the credit risk of the Chinese banks, this paper firstly conducts a review on the present situation of quantified credit risk both from home and abroad, and concludes that our credit risk management is flawed due to the qualitative analysis and the static management. Secondly the paper makes it a point that the quantified management is imperative and we should borrow some lessons from the mature model on quantified management abroad at present.This paper gives an introduction of the four popular models. In the meantime, we lauches a quantified analysis on the loan portfolio from one of the branches of the Agicultural Bank of China, and the results show that to some extent the Credit Risk+ model is feasible and suitable for enhancing the quantified management on the credit risk of our Chinese banks.