Commercial Banks To The Concentration Of Risk Management: Theory And Practice

Risk concentration is the important reason of bank's bankrupt. Between the Asian finance crisis in 1997, countries with high rate of risk concentration in some corporations or industries have more trouble in the crisis. Risk concentration comes from the concentration of asset, debt or income. Many things bring on the concentration of risk, the important one is for the purpose of chasing after high gain by bank in the given condition. Because the high gain usually concentrate on some point, the concentration of bank's operation and the concentration of risk are existing everywhere. The forming and popularizing of the mechanism of controlling risk concentration is recognized very important in the world. The Basel Committee on Banking Supervision, the European Union and others countries and organizations come into forming some statutes for dealing with risk concentration. At present, the banks' credit loan in China concentrates on some big well-known corporations and some ascendant industries, once the crisis coming, the risk of concentrated behind the operation's concentration will make the bank in hot water; so the establishing and perfecting of the mechanism of controlling risk concentration became the urgent affair in the risk management of banks.The first portion of this paper is "theory analyzing of risk concentration". It introduces the connotation of risk concentration and some conception correlative: exposure, large exposure, single counterparty, and correlated counterparty, then sorts the risk concentration with its existing form, and analyses the cause of formation; following, I introduce the limit of big exposure in some countries; with these foundation, I summarize the method and measure for preventing and relieving the concentration of risk.The second portion of this paper is "the actuality and the unique cause of risk concentration in china". It depicts the actuality of risk concentration of commerce banks in China by the data from banks' annals and finance almanac, following, I analyses the unique cause of formation.