Current Credit Risk Management Pr4actices in Chinese Banking Industry

Zheng, Hao (2008) Current Credit Risk Management Pr4actices in Chinese Banking Industry. [Dissertation (University of Nottingham only)] (Unpublished)

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Bank loans can be characterized as the engine of the Chinese economy as the

economy is almost financed by bank loans. As a result, Credit risk management in

Chinese banks is not only the issue to those banks, but it is also essential to the

stability of the whole economy. Inadequate credit risk management practices can

create an unforeseeable disaster to China in the future, especially with a significant

increase in credit expansion. In the last decade, the government has tried hard to

reform the banking industry, but there are still problems in the banking industry. It is

not surprise there are still problems in relate to credit risk management.

The Basel committee (1999) defines bank credit risk as the potential that a bank

borrower or counterparty will fail to meet its obligations in accordance with agreed

terms. The goal of credit risk management is to maximise a bank�¢����s risk adjusted rate

of return by maintaining credit risk exposure within acceptable level. In the context of

asymmetrical information, the most effective way is to reduce asymmetry information

between lenders and borrowers. This study will mainly follow this framework to carry

out the study with some other considerations as well (loan pricing, credit risk models

et al).

The original objective of this study is to investigate the current credit risk

management practices of loans to SMEs in China. However, the major results of this


study provide much wider findings. During the research, the researcher has

discovered the problems that presented in SMEs loan also represent the general

problem in credit risk management practices in Chinese Banks. Hence, after careful

consideration, the aim of this study will be more likely to focus on the current credit

risk management in Chinese banking industry.

Key word: Credit risk management, asymmetric information, expert system, credit

risk models, relationship banking and loan pricing models.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 30 Sep 2008
Last Modified: 05 Feb 2018 12:24

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