Commercial Bank’ Risk Management Research In Credit Extension For Small And Medium-sized Enterprises

With the rapid growth of the private sector, SMEs(small and medium-sized enterprises) are gaining more and more significance as well as prominent place in the development of the national economy., They have made valuable contribution to the development of the national economy, whereas there is still no effective ways to help solve the problem of SMEs to get financing, which is now in the spotlight. In the short run, commercial bank credit funds is still the most important way for SMEs to get external financing. Thus, commercial banks play a crucial part in solving the problem of SMEs financing by offering supportive credits for them. For commercial banks, to establish a sound mechanism of risk management in SMEs credit extension is not only meaningful to help SMEs to get financing, but also helpful for commercial banks themselves whose profit margin is becoming increasingly narrower. From commercial banks’ perspective, this paper analyzes the current condition of how commercial banks offer credit extension for SMEs, and points out the reason why it is not easy for commercial banks to offer credit extension for SMEs. The paper probes into the origin of non-performing loans, both the internally (bank itself) and externally (enterprises), and unveils the lesson to learn for commercial banks in managing risk in credit extension. It points out that modelization of management is a new approach for commercial banks to develop business with SMEs, and deeply analyzes the background of modelization, contents and representation, as well as the relationship between modelization and risk management, and the practical effect for commercial banks to establish risk management modelization.The paper includes 7 chapters. In the first chapter, the author introduces the background of the subject, the value, studying approach and method. In the second chapter, the author expounds the western studying condition of this subject; in the third chapter, the author analyzes the current condition of how commercial banks offer credit extension for SMEs, and points out the reason why it is not easy for commercial banks to offer credit extension for SMEs; the forth chapter probes into the origin of non-performing loans, both the internally (bank itself) and externally (enterprises), by taking the example of all the non-performing loans the G Bank has had since 2008 in Zhejiang province, and also points out the new method for commercial banks to offer credit extention-modelization of management. The fifth chapter, it elaborates the practical effect by analyzing certain cases. The sixth chapter puts forward a comprehensive discussion on structuring of the risk management mechanism. The seventh chapter draws the conclusion and brings forward the suggestion.