Credit Derivatives And Credit Risk Management,

Being the oldest risk in the sector of the financial market, credit risk has a lot of unique characteristics compared with other risks. And precisely because of it, its appearance brings a tremendous effect to the society. In recent years, the credit risk in the financial system is increasing with the rapid development of Chinese economy. The economic globalization and financial integration put forward a higher request for credit management. The traditional method of risk control is no longer suitable for the economic development, and a new way is to be explored. There is no doubt that it is helpful for the security of current Chinese economy to develop a new and more scientific method for credit risk management.This paper aims to introduce and analyze a new method of credit risk management—credit derivatives, and study both the advantages and disadvantages of it in real practice. The empirical part utilizes "panel" method to find out the relationship between credit derivatives and the volume and quality of the loan in the top 5 big commercial banks of America. The result supports the view that the credit derivatives take a positive role in risk control and asset quality improvement.At last, this paper analyzes the feasibility of introducing credit derivatives into China, and advises some possible ways of implementation.