Research On Financial Risk Control Of Commercial Banks

With the deepening of the interest rate market and the increasing degree of financial opening to the outside world,commercial banks in China are gradually becoming internationalised.However,at the same time,China is also improving the regulation of commercial banks and has introduced a series of policies.The banking industry is very sensitive to changes in policy and once a series of policies are introduced,there will be significant changes in the day-to-day operations of banks.Although the financial risk management system of commercial banks in China has been gradually improved in recent years,some negative incidents still occur from time to time.As a typical representative of commercial banks,Huaxia Bank’s overall financial risk management deployment work is still in its infancy and has very weak financial risk control capabilities,which cannot proactively make timely responses to the current business environment,resulting in Huaxia Bank being penalised several times since2017 and gradually increasing financial risks.Due to the lack of practical experience and blind pursuit of interests,Huaxia Bank has experienced many problems in capital adequacy,asset quality and liquidity,etc.In order to solve these problems,it is necessary to improve the bank’s ability to control financial risks.Therefore,this paper takes Huaxia Bank as the research object,based on the characteristics of its industry background,reviewed many relevant literature,combined with the theory of financial risk of commercial banks,for the financial risks faced by Huaxia Bank,through the camel evaluation system to identify the financial risks of Huaxia Bank in the past five years in a more scientific and systematic way.This paper identifies the specific financial risks of Huaxia Bank in five aspects:capital adequacy,asset quality,liquidity,profitability and management level risks,and selects 16 financial risk evaluation indicators,and uses the hierarchical analysis method to construct a financial risk evaluation system for Huaxia Bank using the corresponding indicators according to the results of its financial risk identification.The importance of the indicators was measured so as to calculate the comprehensive weights of the relevant financial indicators,objectively and accurately judged the indicators that have an impact on the size of Huaxia Bank’s financial risk,compared with the average level of each indicator of commercial banks,and rated Huaxia Bank’s financial risk overall according to the financial risk rating criteria,intuitively deriving the gradual exposure of Huaxia Bank’s operational and financial risks during the period 2017-2021.Problems and financial risks,and through industry horizontal comparison and year vertical comparison analysis,the change in the rating of each indicator of Huaxia Bank over the five-year period to determine the current financial risk is greater,and the comparison of the five guideline level indicators of risk for detailed analysis of the problem.Therefore,this paper proposes targeted measures on how Huaxia Bank can carry out effective and relatively reasonable control of financial risks to avoid further expansion and increase of financial risks,so as to ensure the healthy,stable and long-term development of the bank in the future.As less attention has been paid to Huaxia Bank,a commercial bank with shareholding characteristics and special characteristics,this paper takes Huaxia Commercial Bank as the object of study to provide effective risk analysis and evaluation and control measures for other commercial banks of the same type in financial risk management,in order to provide reference and inspiration.