Commerical Bank’s Credit Operation Mode And Risk Management In China For Small Enterprises

In recent years, Chinese governments and financial regulators at all levels as well as market participants have been engaged in resolving the thorny issue of financing difficulty confronted by small enterprises. In particular, the China Banking Regulatory Commission(CBRC) puts forward a series of requirements for commercial banks that the specified regulation policy should be launched for serving small enterprises in terms of financial institutions access, capital charge, capital occupied and non-performing loans tolerance. Meanwhile, the CBRC encourages commercial banks to increase the credit support for small enterprises to avoid management difficulties led by the capital chain rupture that would affect the smooth-running of economy. On the other hand, the commercial banks, under the pressure of intense market competition for big clients, start to adjust their business strategy to small enterprises with the provision of specified financial products and service, thereby opening up a new profit point. These series of initiatives, to some extent, reduce the financing difficulty of small enterprises, and however, subject to the development scale of small businesses and risk appetite and risk management of commercial banks, the financing satisfied rate of small enterprises has not evidently increased, hovering in the lower end.First of all, based on the theory of information economics, the thesis analyzes the financing difficulty of small enterprises. This is because the asymmetric information between banks and enterprises causes the adverse selection and moral hazard, and moreover commercial banks as risk-averse investors subject to the existing means of risk management normally choose to reduce credit support for small enterprises in order to avoid risks, thereby making small enterprises financing more difficult.According to a sample survey, it is found that domestic commercial banks implement credit rationing, which causes more financing difficulties for small businesses than big ones. From the perspective of commercial banks, the thesis analyses the characteristics of financing needs from small enterprises and their financing risk. Due to the fact that most domestic commercial banks are used to adopting the procedure of credit granted to big-enterprise clients with specified risk management, it is hard for small enterprise to obtain credit fund because of higher transaction cost and risk.Secondly, it introduces the means of risk management taken by commercial banks applied to small-enterprise credit business, and also presents advanced methods of risk management adopted by foreign banks in the field of credit operations of small business. Besides, taking Z Bank as example, it investigates the procedure of credit operations towards small enterprises.Last but not least, through the analytical method of SWOT, it illustrates the opportunities and challenges of Z Bank in the field of credit operations towards small enterprises. With reference to successful experience of foreign banks, it is suggested that Z Bank from the perspective of information, technology and expertise should establish risk management system for small-enterprise credit operations, optimize the operation procedure, strengthen the team-building of risk management and form a good atmosphere of risk management so as to ensure the stable and sustainable development of Z Bank.