Research On The Credit Risk Management Of Rural Banks In Heilongjiang Province

In December2006， the China Banking Regulatory Commission issued a policy to encouragevarious types of capital set up mainly for the local farmers to provide financial services，such asrural banks， loan companies and mutual funds community. The first batch of are selected six pilotprovinces (regions) in Sichuan，Inner Mongolia，Gansu，Qinghai，Jilin and Hubei. Rural banksmeans the banking institutions to provide services to local farmers and enterprises. The ruralfinancial market has been in the imbalance state in China，with the accelerating process ofurbanization in rural areas，this imbalance of supplying and demanding is more pronounced. Underthese conditions， the establishment of rural banks which serve for the "three rural"， whichimprove the rural financial organization system，which develop new channels of supply of ruralfinance. In order to improve the rural financial system，activate the rural financial market and easethe pressure of farmers and rural small and medium enterprises loans，The Heilongjiang Province，has opened five pilot rural banks in2008. After preliminary exploration and practice， in2010，therural banks entered a phase of rapid development in Heilongjiang Province，and to the end of2011，the village bank opened in Heilongjiang Province has reached19(two under construction).With the good momentum of the development of the rural banks，a lot of problems associated withthe development process. In fact, the rural banks in the course of business face the same risk withthe traditional bank, such as credit risk, interest rate risk, liquidity risk, policy risk. Theoperational characteristics of the rural banks determine the main risks facing the credit risk. Thispaper aims to analysis of Heilongjiang Province Rural Bank Credit Risk Management to identifythe problems and causes of the credit risk management of rural banks，using the combination ofempirical analysis and theoretical analysis method to study the affecting factors of credit risk ofrural bank in Heilongjiang Province. Finally，the paper put forward recommendations to promotevillage bank risk management in Heilongjiang Province.This paper summarizes the existing domestic and foreign literature and overview the researchstatus of the rural banks credit risk-related issues. The paper describes the definition of rural banksand credit risk, credit risk management methods which include traditional credit risk managementmethods and modern credit analysis. Meanwhile, it describes the development status of the ruralbanks in Heilongjiang Province, sums up the characteristics of rural banks credit risk inHeilongjiang Province, and finds out the existing problems of the rural banks in risk managementby analyzing the status quo of rural bank credit risk management. In empirical research, this articleuses AHP to research village bank credit risk evaluation factors, including the repayment ability of the borrower’s, repayment willingness and repayment history, loan guarantees and bank creditmanagement in five areas to determine the proportion of the credit evaluation should accord for. Inaddition, by summing up the experience of the American Community Bank and the Grameen Bankin Bangal, risk management experience, combined with the actual situation of the banks inHeilongjiang Province, summed up the revelation to the rural banks in Heilongjiang Province.Finally, it is proposed to manage the credit risk of the good village banks should improve theinternal management of rural banks and improve the external financial environment of rural bankcredit risk management.This article mainly uses a combination of qualitative and quantitative analysis, combinedanalysis of empirical analysis and normative analysis. In terms of the analysis of village bankscredit risk management, the statistical method, the graph and quantitative tools for quantitativeanalysis are applied. According to the results of the quantitative analysis of rural banks inHeilongjiang Province qualitative analysis the problems of credit risk management. At the sametime, The empirical study is applied to analyze the impact factors of village banks credit riskevaluation. Finally, the comparative analysis is applied to analysis the experience of the credit riskmanagement of foreign small and medium-sized financial institutions, combined with the actualsituation of rural banks in Heilongjiang Province, to come to promote rural bank credit riskmanagement suggestions.