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Risk Management of China’s Banks in Process of Interest Rate Marketization

Author: TianHuaChen
Tutor: ZhangZongCheng
School: Huazhong University of Science and Technology
Course: Western Economics
Keywords: Interest rate market Banks' risk management Path dependence Continuous VaR Deposit and loan pricing The plight of the three-pronged
CLC: F832
Type: PhD thesis
Year: 2005
Downloads: 1691
Quote: 5
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Abstract


Our country is in a critical period of financial reform, the interest rate market is the one of the important issues in this period. How the interest rate market is in progress, to ensure Buzhi Yu affected by sustained and rapid economic growth since the reform and opening up in 1978, to ensure that the financial system, particularly banks can continue to provide effective support for economic growth, while the banking industry is currently in China financial sector still occupies a very important position, to make economic growth and financial reform can be carried out smoothly, it is necessary to study market-oriented interest in banking risk management. Has been a lot of literature in view of the present study the risks of banks and specialized research in which certain types of risk, this article does not intend to this in general terms, but the interest rate market and the status quo of China's banking sector is closely related to several major issues in depth research, both commercial banks' internal risk management microscopic innovative use of technology, such as continuous var, including a common problem facing the banking sector as a whole, such as non-performing loans and non-performing assets to resolve the pricing of bank deposits and loans, personal loans, business credit risk management and interest rate adjustments in the interest rate market strategies, including macro-financial policy, especially interest rate policy may be the impact of banking operations, financial reform path of the interest rate market, how to avoid them down the wrong path of reform . Analysis of these issues, this paper uses a combination of qualitative and quantitative approach to enable it to join in one of the main line through interest rate. Banks are particularly at risk for interest rate risk management methods and techniques have been more, and continues to innovate, management methods that are commonly used in Western commercial banks, such as duration, gap management technology comparative analysis pointed out the advantages of each method The shortcomings of the applicability and the possible consequences. View of risk management in the traditional case is actually more to corporate customers as an object, the personal loan business in China is gradually on the rise, but the corresponding risk management is very weak, even neglected, does not rule out a period of time will be the same as the company's business the emergence of a large number of non-performing loans, this paper, in-depth study loans for personal consumption credit risk management, this management idea, in essence, is consistent with the loan business with corporate clients. VaR model is a commonly used tool in risk management by the bank interest rate, exchange rate risk of price fluctuations, which produces more than 10 years, extended to credit risk, portfolio risk and capital requirements. However, the conventional VaR only consider a certain probability, loss of some end of the period, ignoring the path of the holding period movements in asset prices and the resulting loss probability of the holding period, and in fact, changes in asset prices tend to path-dependent, the theoretical defect led to the underestimation of conventional VaR. In this regard, the paper uses improved continuous VaR calculation method, which includes those in the middle break through the threshold, but returned at the end of the period to the probability of loss above the threshold, to make up for

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CLC: > Economic > Fiscal, monetary > Finance, banking > China's financial,banking
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