China's Commercial Bank Loan Loss Provisions For The Study

Risk provision is a measure of financial institution to ward off asset risk and compensate for asset loss may occur in the future, mainly to guard against risk and supplementary capital. With increasingly fierce competition, appropriate risk provision system has been key instrument for financial institution's sound operation and risk control. The risk provision manage of China's commercial banks has just started not long before. Relevant system has been initially set up and practised. Nevertheless, these theories and practices are far from maturity and perfection. Therefore, the dissertation targets the loan loss provision of the risk provision of China's commercial banks as the research object. With focus on the future discounted cash flow method of evaluation loan loss provision, the dissertation intends to reveal the essence of loan loss provision and hence lay a solid foundation for the risk management of China's commercial banks.This dissertation begins with a review of the theory about the loan loss provision evaluation of commercial banks. And then, problems are put forward about loan loss provision of China's commercial banks by comparing and analyzing the international and national develop course, existing rules and main evaluation method of the loan loss provision of commercial banks. Later on it probes into the key issues of the future discounted cash flow method of loan loss provision evaluation practice of China's commercial banks, which lead to the current status and existing problems of the future discounted cash flow method of special commercial banks. Based on this analysis, the author tries to modify the method and eventually comes up with countermeasures for improvements.The main opinion and innovations of this dissertation are as follows: (l)Loan loss provisions management of China's commercial banks is still in its initial stage, the most important task is to implement the principle of Basel Committee, regarding the adequacy of loan provision for the full coverage of loan loss. (2)Getting the conclusion of the future discounted cash flow method could cover more real loan loss, by comparing and analyzing two different domestic method of loan loss provision evaluation. (3)Designing a set of differentiated weights of cash flow prediction and stretch man-made grading scores, then use these calculate out the different adjust coefficient, through modifying the criteria of the future discounted cash flow method. (4)Proposing the solution and countermeasures for China's commercial banks by researching problems found in regulations and practices of the loan loss provision, and pointing out the direction of upgrade the manage level of China's commercial banks.