Research On Risk Management Of D-SIBs Based On Basel â…¢

The internatiaonal economic situations have changed rapidly since1970s, such as Bretton Woods system broke up and the oil crises have brought up series bad consequences which include serious inflation, fluctuation of capital cost, slow growth or even economic stagnation etc.Basel Committee is mainly responsible for coordinating global banking risk supervision, innovating risk supervision ideas, improving supervision quality through setting up risk management targets,plan universal risk management methods for entire global banks in different countries and all of these tasks are trying to make sure the stability of the financial system.Basel Committee issued<Basel Ⅰ> in july1988and it says since the banking assets business is the main source of banking risk and it’s compensated with bank capital,so bank capital should be charged according to the variation of assests business.Bearing this sense in mind the key supervision focus switched to risk assets.with the explosion of Asia pacific financial crises in1997, financial system had turned to be vulnerable and Asia pacific economy had been damaged too.At that time Basel Committee started to think it’s because the banks lend too many loans to the real estate enterprises and when the economy shut down these enterprised couldn’t afford those borrowed money,so committee began to revise <Basel Ⅰ> and <BaselⅡ> didn’t come out until June2004.<BaseⅢ> has released three pillars which are Minimum Capital Requirement, Supervision Review Process and Market Displicine for the purpose to improve banking risk management.However the Subprime Crisis in2008has proved that these three pillars can’t be effective enough to prevent the risk extention within financial system so the experts continuously issued several regulations about how to upgrade the risk management system and after few months discussion<Basel Ⅲ> come out in2010. It has introduced new rules in three aspects, the definition of Tier1capital, Capital Conservation Buffer&Countercyclical capital and the lowest percentage of common stock.All the member countries in Basel should start to accomplish<Basel Ⅲ> on01.01.2013and the lastest time is12.31.2018.In this paper it takes samples from the Domestic Significantly Important Banks (D-SIBs), mainly state-owned big four banks (BOC,ICBC,CCB and ABC) and based on these first start to clarify the definition and charaterisks of risk&banking risk, then tease out the four steps of banking risk management theory and come to describe the current banking management situations under the era of ERM and which is also under the frame of Basel Ⅱ&Ⅲ.Then there’s a detailed description of Basel history all over the years and overall comparion about the backgrounds, content, innovations and development tendency of these three Basel regulations which leads to the influence of BaselⅢon commercial banks risk management.Furthermore, this paper start to compare the banking risk based on the big four banks starting from12.30.2010to06.30.2013in the following five aspects, capital management, liquidity risk, credit risk, market risk and operating risk as well as other cores values that could reflect the multiple risk buffer level in financial system.As the conclusion of all discussed above,paper has reached a conclusion and bring out own suggestions for a better banking risk management.Main contribution in this paper is analyzing the current risk management situations of big four D-SIBs under the frame of Basel Ⅱ&Ⅲ using various supervision risk indexes published by China Banking Regulatory Commission (CRBC).Paper covers capital management, liquidity risk, credit risk, market risk and operating risk to the full edge under achievement of ERM and draw a conclusion that how Chinese banks should perfect and upgrade the current management systems and frameworks. Deficiencies in this paper is restricted to limited time that I couldn’t have access to2013financial report so I only compare from2010.12to2013.06.Besides this paper maily inclines on quantitative analysis using pure index is another shortage.