The Study Of The Prevention Of Country Risk Of Commercial Banks In China

In the background of economic and financial globalization, the Americansub-prime mortgage crisis in2007quickly spread to become a global financial crisisbecause of derivative amplification. Economic rescue plan of various countries easedfor the time being of all weapons crisis, but due to the large amounts of governmentbonds issued, many countries are facing a slowing economy and a huge debt doubletrouble. This increases the risk of sovereign default. Through the global financialsystem channels, international capital flows and international trade channels,financial crisis makes many countries rise sovereign credit rises and downgradesovereign credit rating. For instance, sovereign credit crisis in some countries inEurope are essentially those of the Western developed countries facing a massivedebt crisis and Euros are also in a precarious state. The financial systems of somecountries exist some problem, such as inherent structural problems, excessiveopening economy, vulnerability factors of the economic structure as well as theeconomic and political weakness, which makes it easier to absorb the crisis weaker,more easily exposed to critical thus widening sovereign credit risk.This paper starts from the country-risk level of commercial banks, first, introducethe related concepts and theory of the country risk; second, analyze the foreigncommercial banks on country-risk prevention methods and the several influentialfinancial crisis since the90s of the last century, using this as a reference to ourcountry-risks of commercial banks. Then, do more clear understanding on thepresent situation of country-risk in China. Finally, the article concludes with astrengthened policy recommendations for country-risk management of China’scommercial banks, set the credit limit of country-risk and strengthen the externaloversight environment of country-risk to effectively avoid the country-risk.