Commercial Bank Real Estate Development Loans, Credit Risk Stress Testing Practices

From the beginning of the end of last century, more and more first-class international commercial banks and investment banks use stress testing techniques to assess the individual institutions to bear the extreme macroeconomic, major financial market volatility shocks. In this context, the theme of this paper is to carry out the practice of credit risk stress testing concerning.the current macroeconomic situation and the impact on the larger high-risk.The paper is attempted to study the problems existing in stress testing and the suggestion for commercial banks to carry out credit risk stress testing. The full text is divided into three parts.The first part introduces the general theory of stress testing and methods. This section includes the purpose and role of stress testing, stress testing the basic process, pressure testing the three elements of risk classification.The second part is an analysis the process and method of the real estate development loan credit risk stress. This section will use top-down approach and bottom-up approach to stress testing practices in real estate. Top-down methods of analysis which will analyze the impact of A real estate development loans the bank non-performing loan ratio for the case of the factors that, Through stress testing,we could found that real estate development investment and the level of the line price of real estate development enterprise in Chengdu rate of non-performing loans more remarkable. A bottom-up approach to analyze the real estate business customers the bank C funding gap for the case, through the pressure test by the C company sales prices and turnover in Chengdu was affected more significantly, in the stress testing, the company was to expand the trend of funding gap, in which the average price of housing in the Chengdu region declined by 8% under severe pressure, the company's largest funding gap.The third part of the problem encountered in practice.as well as the recommendations of the practice of stress testing. At present, the problems of the testing of the major commercial banks are as follow:the difficulty of the basis of accurate data support the work of the pressure test, pressure test the design more difficult scenario to refer directly to the scientific model of abroad, subject to further assessment, the lack of proficient expertise stress testing, some commercial banks in the high Pipe Layer importance of stress testing effort is not enough. Thus commercial banks should be carried out the following pressure testing:to strengthen the accumulation of data to improve data quality, the stress testing focus on the risk of transmission mechanism and the scenario design of internal rating system metering systems and other related research and development work, the development of stress testing management practices, a clear organizational structure and stress-testing responsibilities to develop a set of stress testing report a mechanism for regular and irregular stress testing to carry out the work to speed up the training of stress testing.