Reseach On Bank Perofrmance Based On Credit Risk Mitigation Tools

Banking, finance industry and the whole national economy developmentdepends on balanced growth in business performance of the micro-financeparticipants by altering operation philosophy,improving risk managementtechnique and updating business software and hardware technology. Inputfactors assessment in the operating performance,detecting strength andweakness in management, exploring methods to improve bank performancepath, and seeking financial innovations are of highly significance inthe development process of both the bank and national economy.Literally,mitigation means resolving the problem slowly and withthorough consideration. Mitigation is a two-stage method, by which therisk engendered by loaning and risk of default of contracts are resolved,that is to restrain traders' behavior and insure trading outcomes.However, the macro results for mitigation is to maintain financial systemstability and balance of financial subsystems The current situation inChina is that, despite the fact that credit decision-making is highlydependent on collaterals, the studies of collaterals and its effect oncommercial bank performance, using micro data, are significantly scarce.Besides, the lack of the financial data makes it considerably hard tocheck newborn credit derivatives market in China through empiricalresearch.Base on the above concerns, this article focuses on the big pictureof Credit Risk Mitigation tools(CRM) development in China and theireffects on performance of commercial bank in China, by theoreticallyanalyzing the incentive and restraint mechanisms of credit riskmitigation tools (the case in collateral) and other factors over marketparticipants common behavior,and empirically analyzing effects oncommercial banks performance in China of Credit Risk Mitigation tools.