A Study On The Risk Management Of Rural Commercial Banks In China

In 2001,the first rural commercial bank in China opened a business officially in Zhangjiagang city.Until April 2016,the number of rural commercial banks has reached 1000,and these banks have become the most important component in the financial system in the rural areas during these years.They are the mainstay of the rural financial system and play an increasingly important role in propelling the society and economy forward as well as the development of agriculture,rural area and farmers.With the deepening of the reform in the banking industry,the competition among banks has become more intense.How to guard against and reduce the risk and enhance risk management has become the primary task faced by the rural commercial banks.In this paper,we investigated this problem.First,this paper presents the introduction of the concepts of risk,risk management of the commercial banks,the process and theories of risk management,which serves as the basis for our study.Second,we analyze the current situation of rural commercial banks in China,including study the development of rural commercial banks from the number,asserts and profits after tax,etc,analyze the main risks faced by rural commercial banks and some problems existing in risk management.Then,by the establishment of risk evaluation index,we use the factor analysis to empirically study the risk of 20 rural commercial banks and find that the 4common factors which have impact on the risks faced by the banks are operating risk,risk capital adequacy,profitability and liquidity.And we also analyze the risk based on the scores and ranks of the factors.In the end,the paper puts forward some suggestions on guarding against and reducing the risks,including clarifying self-orientation and enhancing core competitiveness,improving the credit level and paying attention to credit risk,perfecting the establishment of the indexes and monitoring the liquidity risk scientifically,strengthening the incentive mechanism and the training of the professionals,regulating the risk management systems and strengthening the risk supervision.