The Application Analysis Of CDS In The Risk Management Of China's Commercial Banks

For a long time,the financial market in our country has formed a financing model based on indirect financing,which makes a large number of credit assets concentrated in the commercial bank system.The excessive concentration of credit risk has caused great pressure on the risk management of commercial banks in China.As an epoch-making financial innovation in credit derivatives,CDS(Credit Default Swap)provides a new method of credit risk release for commercial banks' risk management with the function of removing and transferring credit risk with its low cost and high flexibility.Based on the new regulatory standards issued by the Basel Committee after the financial crisis,this paper discusses the application of CDS in the risk management of China's commercial banks.First,this paper introduces the impact of the Basel Capital Agreement III(hereinafter referred to as "New Agreement")on the risk management of commercial banks in China,and points out that the regulatory requirements of the New Agreement reflect the global attention to the risk management of commercial banks.It is great significance to the improvement of the risk management level of commercial banks in China.Secondly,it introduces the generation,development and operation mechanism of CDS,and analyzes the advantages and disadvantages of CDS.Thirdly,based on the annual report data of the commercial banks in China,using the mixed model and the fixed effect model,the conclusion is drawn that the future risk management of commercial banks in China is facing enormous pressure,and the necessity of the application of CDS in the risk management of commercial banks in China is illustrated.And the method of simulation analysis is used to obtain the ability of CDS.To provide effective credit risk mitigation methods for commercial bank risk management,it illustrates the feasibility of CDS in China's commercial bank risk management.Finally,based on the status of CDS in the risk management of commercial banks in China and the advantages and disadvantages of CDS,the policy suggestions of introducing CDS into the risk management of commercial banks in China are put forward.