Research On Risk Management Of Commercial Banks

The Chinese government has implemented a 4-trillion investment plan in together with stimulus such as readjustment and revitalisation of ten significant industries that succesfully achieved maintaining stable economic growth and industrial structure adjustment in final as a solution to the US subprime crisis by which the whole global financial market was deeply influenced in 2007.However,these Keynesian style policies not only fulfilled the purpose of policy maker but also unexpectedly pushed the economy to a risky status of high debt ratio and high leverage ratio:stimulated by monetary easing policy and blindly optimistic anticipation,several industries such as Steel and Coal quickly expanded and finally supplies far more exceeded demands within these industries that created dramatic drops on price of products.The decreasing marginal return of investment in these traditional industries leaded to a run of capital towards high-yielding industries,especially the real estate industry.At last,the continuity and high-speed growth of Chinese economy were no longer sustainable.In 2016,macroeconomic environment significantly changed:major economies started to withdraw from quantitative monetary easing;the Chinese government introduced supply-side reform.Banking industry in China was facing varied and complicating challenges: Tighter industry regulation;fierce competition within industry;increasing in cost of capital in together with declining in profit rates.It is the time that banking industry in China must pay great attention to its own risk management techniques and ensure these techniques are able to cope with any possible changes.In this paper,through a combination of in-depth study of the case found that commercial bank risk management of the internal factors including corporate governance structure,organizational structure,incentive mechanism,risk culture and talents,the construction of information system and information disclosure,corporate governance problem boils down to the commercial bank;perfect corporate governance should focus on this three key system,mechanism and culture ",and properly handle the core system,structure and mechanism,balance and coordination,external supervision and internal governance,shareholders and stakeholders such as the five relations,provide a good internal environment for commercial banks to implement comprehensive risk management.The external factors,the social credit system,supervision system,information disclosure market constraints constitute the three pillars of commercial bank risk management based on the external environment,put forward a comprehensive risk management system of commercial banks should set up perfect and effective,must follow the "Basel III" and "capital management" on the basis of the establishment of comprehensive the principle of risk management;and then from the commercial banks to improve the internal environment to take the following measures: to improve corporate governance,establish incentive and evaluation mechanisms,especially should emphasize the comprehensive risk management must eventually implement the "people" of the head.As for the external environment,we suggest the government(government)should strengthen their own construction,improve the relevant laws and regulations,and to promote China's market system constantly improve,give full play to the three pillars for the comprehensive risk management of commercial bank support.This article contains 8 chapters:Chapter 1:an introduction of background,purpose,method and content of this research.Chapter 2: an introduction of theories on risk management,analysing the relationship between theory and practise.Chapter 3: an introduction of structures of risk management in banking industry: including the introduction of mechanism of risk management in banking industry;mechanism of capital management measures in banking industry;the relationship between capital management measures in banking industry and BASEL III.Chapter 4:an introduction of current situation and problems of risk management in banking industry in China: including the introduction of types of risk,status quo and inadequacies of risk management in banking industry.Chapter 5: an analysis on the external and internal environment of risk management in banking industry in China.Chapter 6: case studies on Shanghai Pudong Development Bank:Chapter 7: suggestions and solutions on risk management in banking industry in ChinaChapter 8: Conclusions and prospects.