Market Risk Prevention Of Personal Financial Products

The past few years have witnessed the rapid development of personalfinance service. Commercial banks launch a variety of finance productsin a mad rush to be the first in order to seize the financial market share.Commercial banks and individuals earn profits but followed by increasingrisks of personal finance products, which puts heavier burdens on thebanks, regulatory bodies, and guarding risks on the investment. Amongall the risks of personal finance products, markets risks can be put ontop risk and exert the most important effects. Consequently, it isextraordinarily important to do a research on the market risks of personalfinance products launched by commercial banks and find out a way toguarding these risks.In chapter1, this paper analyzes the background of the subject andsignificance of research, reviews the relevant domestic and abroadliterature, and constructs the integral frame.In chapter2, having defined the concept of risks, this paperclassifies the personal products from different perspectives andanalyzes the problems existing in the market risk prevention of personalfinance products launched by commercial banks in China from the pointof banks, regulation, personal investment and macro economics in asystematic way.In chapter3, this paper classifies the market risks of personalfinance products as interest rate risks, exchange rate risks, share pricerisks and commodity price risks. Furthermore, this paper analyzes drivingfactors of these risks.In chapter4, at the very beginning, this paper introduces two waysof measuring market risks of personal finance products, i.e. VAR Modeland Modified Duration Model.What is more, in section2, this paper carries out a quantitative analysis on the exchange rate risks of personal finance products byemploying modified duration model, and summarizes the relationshipbetween modified duration, market exchange rate, YTM and term to maturity.Besides, in section3and4, this paper measures the exchange rate risksand commodity price risks of personal finance products respectively withhistorical simulation method. Lastly, qualitative analysis is carriedout in section5aimed at share price risks of personal finance products.In chapter5, from where the bank, regulatory bodies and investorsstand, this paper makes a proposal on the management of market risksprevention of personal finance products launched by commercial banks.In chapter6, we summarize the paper and analyze the existing problemsand shortcomings.