Question 1: What is the definition of credit risk and how is it different from credit risk? Credit risk is one type of credit risk.
Credit risk
The formation of credit risk is a gradual process from germination, accumulation to occurrence. Before the expiration of the repayment period, major adverse changes in the borrower's financial and business conditions are likely to affect its ability to perform the contract. In addition to agreeing on general default clauses, setting up guarantees, etc., the lender can ensure that the creditor's rights are repaid as scheduled. You can also stipulate a "cross-default clause" in the contract. The basic meaning of cross-default is: if the debtor under this contract defaults under other loan contracts, it will also be deemed to have breached this contract. Generally speaking, creditors hold the debtor liable for breach of contract on the grounds that the parties have failed to perform their obligations under the contract, but the cross-default clause breaks through this restriction. "Suffering", that is, trying to take relief measures before the borrower's debts under other loan contracts have a repayment crisis, so as to avoid being in a worse situation than other creditors. Although this type of breach of contract is not clearly stipulated in the current Chinese law, it does not violate the relevant legal principles and legal spirit of the Contract Law. The right of defense in the current Contract Law can be used as the legal basis for its application. Therefore, cross-default clauses can be included in the contract as agreed terms, so that the lender can promptly and comprehensively control the credit level of the borrower.
Credit risk
Credit risk (Credit Risk), also known as default risk, refers to the risk of economic losses caused by the failure of the counterparty to perform its obligations in the agreed contract, that is, the fiduciary cannot The main type of financial risk is the possibility that the credit grantor's expected return will deviate from the actual return due to the obligation to repay principal and interest. In the past few years, credit derivatives (Credit Derivatives), which use new financial instruments to manage credit risk, have developed rapidly. Appropriate use of credit derivatives can reduce investors' credit risk. Industry insiders estimate that the credit derivatives market only took a few years to develop. In 1995, the global transaction volume reached US$20 billion.
Question 2: Risk overview of credit risk The types of credit risk can be generally divided into two categories: market risk and non-market risk. Market risks mainly come from the production and sales risks of the enterprise (borrower) (that is, the risks caused by changes in market conditions and production technology and other factors during the production and sales process of the borrower's goods; non-market risks mainly refer to natural and social risks). Risk. Natural risk refers to the risk that the borrower will suffer economic losses and be unable to repay the credit principal and interest due to natural factors; social risk refers to the prevention of credit risks caused by individuals or groups in society, mainly bad credit. There is a famous saying in the credit manual of the Industrial and Commercial Bank of China: "No matter how high the interest we charge, it is difficult to make up for the loss of credit principal!" In 2002, China fully implemented a five-level credit classification system. Bank credit assets are divided into five categories: normal, special mention, substandard, doubtful, and loss. Bad credit mainly refers to substandard, doubtful, and loss credit. Bank credit risk refers to the impact of various uncertain factors on banks. In the process of operation and management, if the actual income results deviate from the expected income target, there is a possibility of asset losses. Credit risk refers to the possibility that the borrowing enterprise cannot repay the credit principal and interest on time due to various reasons and the bank funds will suffer losses. Credit business accounts for a large proportion of bank credit business. Credit has the characteristics of high risk and outstanding returns. Therefore, it is of great significance to study credit risk of commercial banks: ( 1) Objectivity As long as there are credit activities, credit risks exist objectively regardless of human will. To be precise, risk-free credit activities do not exist at all in actual banking work. (2) Hidden credit. The inherent uncertainty loss is likely to be concealed by its appearance due to credit characteristics. (3) The loss of bank funds caused by the occurrence of credit risk not only affects the bank's own survival and development, but also causes correlation. Chain reflection. (4) Controllability means that banks can identify and predict risks beforehand, prevent them during the event, and resolve them afterwards according to certain methods and systems. 1. Operational risk 1). Concept: The fulfillment of market entry commitments has made China's financial market more open to the outside world. Local commercial banks are facing more intense competition, which has put forward higher requirements for commercial banks' risk management. However, due to the lack of property rights of local commercial banks and internal Operational risks caused by factors such as lack of control mechanisms and improper process design have become increasingly prominent. According to the definition given by the Basel Committee in paragraph 1 of the Agreement, operational risk refers to the risk of losses caused by imperfect or problematic internal procedures, personnel and systems, or external events. Operational risk can be divided into two categories based on risk causes. One is the risk of operational failure or error, including personnel risk, process risk and technical risk, etc. The other is operational strategic risk, which refers to the risk of operational failure or error when responding to external events or the external environment. Such as politics, taxation, supervision, government, society, market competition, etc., the risk of losses due to inappropriate strategies.
The former is mainly related to internal control efficiency or management quality, also known as internal risk; the latter is mainly related to external events, also known as external events or external dependency risks. 2) Operational risk management countermeasures and suggested methods to solve operational risks. According to the new agreement, there are three main types: basic indicators, standard method and internal model method. The core is to allocate capital according to different risk weights. However, for Chinese commercial banks, due to the difficulty in collecting data on personal housing credit operational risks and the short time of business development, it is basically impossible to use statistical methods and information simulation. The unpredictability of operational risks is particularly prominent in China, so a more realistic approach The focus of preventing operational risks is to focus on the following four aspects: 1. Strengthen the management of processes 1. Inspect and sort out existing processes to eliminate possible loopholes. Although all commercial banks in China have regulatory departments and risk management departments, they do not have specific operational risk management departments, let alone operational risk management departments for personal housing credit. There are many loopholes in the loan contract and loan process. If not corrected early, it will seriously affect the development of the business. 2. Conduct careful analysis and market research on newly developed products to avoid blind investment, ineffective investment and high-risk investment. Product updates in the personal housing credit business are gradually accelerating. In order to seize market share, various banks have made a lot of innovations in many aspects such as repayment methods, guarantee methods, and handling methods. However, whether these innovations have undergone sufficient market research and strict operational risk review , questionable. It is understood that China's business... >>
Question 3: What aspects does credit risk generally include, and how to control the risk? Generally speaking, credit risk mainly includes credit risk, market risk and operational risk. In layman's terms, it means whether the borrower is a fraudster who is simply trying to defraud money, or whether there is a risk that the loan will not be repaid. Regarding how to control risks, generally speaking, we mainly start from three aspects. The first is the background investigation before lending, which mainly checks whether the borrower's information is true and the repayment ability, etc.; the second is the follow-up after lending, which mainly checks the borrower's ability to repay the loan. Is the money used according to the instructions when borrowing? The third is collection, mainly when the borrower is found to have run away or defaulted. However, for traditional credit companies, more and more businesses are currently conducting online business. However, there are many shortcomings in controlling risks using traditional risk control methods, such as the efficiency of review and lending. Therefore, more and more credit companies are turning their attention to third-party risk control software. From media reports, we can see that the top 100 domestic credit companies are currently using third-party risk control software, especially Hangzhou Tongdun Technology’s , basically covering existing credit companies.
Question 4: What is commercial bank credit risk? Overview of commercial bank credit risk The types of credit risk can be generally divided into two categories: market risk and non-market risk. Market risks mainly come from the production and sales risks of the enterprise (borrower) (that is, the risks caused by changes in market conditions and production technology and other factors during the production and sales process of the borrower's goods; non-market risks mainly refer to natural and social risks). Risk. Natural risk refers to the risk that the borrower will suffer economic losses and be unable to repay the credit principal and interest due to natural factors; social risk refers to the prevention of credit risks caused by individuals or groups in society, mainly bad credit.
Question 5: What does it mean when the loan always shows that it is not within the scope of the risk definition? Both banks and credit companies will list some groups of customers that are not accepted. These groups have higher risks. , is a means of avoiding risks. The reason why you were rejected is that you belong to a risky group.
Question 6: What are the causes of credit risks? "Microfinance Companies" by Guobei Institution. "100 Questions" and the Microfinance Efficient Risk Control Course of National Training Institutions mentioned:
(1) Credit risk
Credit risk, also known as default risk, refers to the risk caused by the borrowing unit or A kind of loan risk caused by an individual's failure to fulfill the contract, inability to repay the principal and interest of the loan, or unwillingness to repay the loan principal and interest
(2) Interest rate risk
Interest rate risk, also known as market risk, refers to. The possibility of causing losses to credit institutions due to changes in market interest rates, and loan interest rates matching the upper and lower terms, amounts, and methods.
(3) Internal risks
Internal risk is also called management risk or operating risk
(4) Liquidity risk
Liquidity risk is the insufficient amount of liquid assets held by the bank to meet payment needs. As a result, the bank has the possibility of insufficient solvency.
(5) Competition risk
Competition risk refers to the possibility of a decrease in customers and an increase in costs due to competition among peers. .
(6) Policy risk
Policy risk is also called national risk. This kind of risk is often related to the adjustment of national economic guidelines, policies, and plans.
Question 7: What is the significance of how to prevent bank credit risks? With the gradual improvement of the market economy and the deepening of financial system reform, the pace of transition from state-owned professional banks to state-owned commercial banks is also becoming faster and faster. As a result, financial problems accumulated over the years have been increasingly exposed, and potential financial risks have become increasingly apparent. For this reason, preventing and resolving financial risks is an urgent issue for state-owned commercial banks. They must pay enough attention and take effective measures to prevent it as early as possible. 1. Causes of credit risk First, it is a concentrated reflection of the long-term accumulation of historical problems. In the past, under the planned economic system, banks implemented hierarchical operations and hierarchical management. As a state-owned commercial bank, it has transitioned from administrative decision-making under the planned economy system to scientific decision-making according to standardized procedures under market economy conditions. In this process, the credit problems latent under the original old system have gradually been exposed, and their specific manifestations There are two aspects: First, corporate risks have been hidden for a long time, accumulated and then exposed in a concentrated manner, and non-performing loans appeared in a concentrated manner. Due to historical reasons, banks and state-owned enterprises have established close relationships. Most of the funds of enterprises come from banks, and most of the assets of banks are loans to enterprises. The two are closely related and have a close relationship. Under the planned economic system, enterprises carry out production and operation activities in accordance with national plans and with the main purpose of completing planned tasks. The products produced are uniformly allocated by the state and will not be unsold. Operating losses are made up by the state and do not need to be borne by the enterprises themselves. At this time, the business risks of the enterprise have not yet formed or have not been exposed. Corresponding bank loans are also risk-free or have less risk. However, with the deepening of reform, market regulation has replaced planned management. While enterprises have the right to operate independently, they must also bear the responsibility for their own profits and losses. As a result, the problems that the company has accumulated over a long period of time began to be exposed intensively. As a result, non-performing loans began to appear, and the business risks of enterprises were transferred to the credit risks of banks. Especially in the process of changing the operating mechanism of state-owned enterprises, a large number of personnel burdens, debt burdens, and social burdens left over from history have been left in the old enterprises, causing a large number of bank loans before the restructuring to be left vacant. Therefore, the current bank loan quality problems are, to a large extent, the result of corporate operating risks that have been hidden, accumulated and exposed for a long time. Second, banks have issued many policy loans in the past, but now they have basically become non-performing loans. Before the promulgation of the "Commercial Bank Law", the status of state-owned commercial banks as corporate legal persons had not been established, and their independent operating rights had not been implemented. Many policy loans were issued under the administrative intervention of local governments. Especially before the establishment of the national policy bank, all commercial banks undertook a considerable number of policy loan tasks. These policy loans were issued by the bank to single enterprises and single projects after coordination by the government. The vast majority of these loans are very risky. A considerable part of the current loan quality problems are caused by policy factors. Second, it is closely related to the excessive debt and poor efficiency of state-owned enterprises. Under the planned economic system, state-owned enterprises rely on state fiscal allocations for their fixed asset investments and a considerable part of their working capital. By the mid-1980s, after the implementation of the “appropriation-to-loan” policy, the government basically did not add capital to enterprises. Enterprises expanded their sources of funds for reproduction, shifting from fiscal appropriations to bank borrowings. As the scale of production continues to expand, capital occupation gradually increases. However, the depreciation rate of state-owned enterprises is generally low, self-accumulation is insufficient, the asset-liability ratio is getting higher and higher, and they are increasingly dependent on bank loans, relying on a large number of bank loans to maintain production and operations. Especially in recent years, my country's economic development has encountered difficulties, and the reform of state-owned enterprises has been difficult. Most state-owned enterprises have suffered losses and poor operating conditions. The main part of the liabilities of these enterprises is bank loans, and short-term borrowings have been occupied for a long time, resulting in a serious lack of financial strength. The capital turnover is poor and the ability to resist risks is very low. When the market changes slightly and marketing difficulties arise, the movement of funds is immediately blocked and the solvency is greatly reduced, which directly affects the safety of bank loan funds. In this case, corporate risks will inevitably be transferred to banks to a considerable extent. Even a few companies with good returns have high asset-liability ratios and heavy interest burdens, and it is difficult to recover loans when they expire. The companies can pay loan interest on time, but banks continue to grant renewals, and loan quality problems have not been exposed. That’s all. Once banks stop renewing loans, bad loans immediately show up. This is an important factor affecting loan quality. Third, it is related to the bank’s operation and management methods. The main manifestations are as follows: First, efficiency is given top priority in operation, while safety is ignored. The "Commercial Bank Law" stipulates: "Commercial banks take efficiency, safety and liquidity as their operating principles." Putting efficiency first and safety second in terms of expression will have a certain impact on bank operations... >>
Question 8: What is the credit risk of commercial banks? Risk
Basic explanation
The formation of credit risk is a gradual process from germination, accumulation to occurrence. Before the expiration of the repayment period, major adverse changes in the borrower's financial and business conditions are likely to affect its ability to perform. In addition to agreeing on general default clauses, setting up guarantees, etc., the lender can ensure that the creditor's rights are repaid as scheduled. You can also agree on a "cross-default clause" in the contract. The basic meaning of cross-default is: if the debtor under this contract defaults under other loan contracts, it will also be deemed to have breached this contract.
Generally speaking, creditors pursue the debtor's liability for breach of contract on the grounds that the parties have failed to perform their obligations under the contract, but the cross-default clause breaks through this limitation. It has the effect of "strike first to gain advantage, but to strike later will suffer" "The flavor is to try to take relief measures before the borrower's debts under other loan contracts have a repayment crisis, so as to avoid being in a worse situation than other creditors. Although this form of breach of contract is not clearly stipulated in the current laws of our country, it does not violate the relevant legal principles and legal spirit of the Contract Law. The right of defense of insecurity in the current "Contract Law" can be used as the legal basis for its application. Therefore, cross-default clauses can be included in the contract as agreed terms, so that the lender can promptly and comprehensively control the borrower's credit level.
Problems and Countermeasures in Commercial Bank Credit Management
Commercial bank credit management, understood in a broad sense, includes: formulating and implementing credit policies, establishing and improving internal authorization and credit systems, formulating, Implement and execute credit operating procedures, as well as establish credit risk monitoring and control mechanisms and many other coordinated and restrictive institutional systems, as well as a supervision system for the effectiveness of system implementation. In a narrow sense, commercial bank credit management only refers to the investigation work before loan issuance, the management work during the loan duration, and the supervision, control and processing work after the loan risks occur. This article adopts the concept of commercial bank credit management in a narrow sense, and on the basis of analyzing the existing problems in the current commercial bank credit management, attempts to put forward the basic ideas and practical strategies to solve this problem. The main problems existing in the current credit management work of commercial banks are reflected in the following aspects: 1. The basic management work is weak and the credit file information is seriously missing. Mainly manifested in the lack of financial information of borrowers and guarantors, loan mortgage certificates, post-loan inspection reports, collection notices and other information. Credit files are records of the complete process of loan issuance, management and recovery by banks. Omissions in them, especially the incompleteness of some legal documents, not only cause difficulties in loan risk analysis, but also constitute obstacles to loan collection in accordance with the law. 2. The loan review and loan separation system was not strictly implemented. The main manifestations are: the slow establishment of the separate loan review agency; the separate loan review agency is just a formality. For example, credit officers often fill in legal documents such as loan contracts, IOUs, and loan vouchers before loan approval, and the contract signing date and the loan IOU date appear to be early. On the loan approval date, the loan amount and term are different from the approved amount and term. 3. The “three checks” system for loans is not implemented. The main manifestations are: first, the pre-loan investigation is just a formality; second, the review and submission during the loan are not strict; third, the post-loan inspection is superficial in tracking the lender’s loan usage, and ignores the borrower’s post-loan credit status, collateral, and pledges. Conduct follow-up investigations on changes in properties, as well as changes in the guarantor’s operating conditions and contingent liabilities. 4. The loan handlers have weak legal knowledge and weak legal awareness, and the loans lose legal protection. The main problems include the following aspects: (1) The qualifications of the guarantor do not meet the requirements of the law; (2) Some commercial banks have not carefully reviewed the legality and validity of the collateral and pledges; (3) In accordance with the "Guarantee" If mortgage registration is required under the Law of the People's Republic of China, failure to register the mortgage in accordance with the law will render the mortgage invalid; (4) Changing the main terms of the main contract, extending the period for performance of the main debt, or increasing the amount of the main debtor's debt without obtaining the written consent of the guarantor, Resulting in the invalidity or partial invalidity of the guarantee contract; (5) Failure to fully utilize the legal provisions regarding the interruption or suspension of the statute of limitations to safeguard the bank's right to collect loans in accordance with the law. 5. The internal supervision mechanism is not perfect, the credit management system has loopholes, and the management of managers is ignored. Mainly manifested in: (1) Some grassroots presidents have too much power and the supervision and restraint mechanism does not really play a role, resulting in some grassroots presidents arbitrarily approving loans, investing, guaranteeing, etc.; (2) Loan responsibilities cannot be implemented, which ultimately leads to If no one is responsible, nothing will happen; (3) The president's business target assessment method is unscientific, which encourages the president's short-term behavior in management, and he has to adopt illegal practices in order to complete the target tasks. ......>>
Question 9: Commercial bank loan risk classification Commercial banks should at least classify loans into five categories: normal, special mention, substandard, doubtful and loss. The latter three categories are collectively called Bad loans.
Normal: The borrower can fulfill the contract and there is no sufficient reason to suspect that the loan principal and interest cannot be repaid in full and on time.
Attention: Although the borrower is currently able to repay the principal and interest of the loan, there are some factors that may adversely affect repayment.
Substandard: There is an obvious problem with the borrower's repayment ability, and it is unable to fully repay the principal and interest of the loan solely relying on its normal operating income. Even if the guarantee is executed, certain losses may occur.
Suspicious: The borrower cannot repay the principal and interest of the loan in full, and even if the guarantee is executed, it will definitely cause large losses.
Loss: After taking all possible measures or all necessary legal procedures, the principal and interest still cannot be recovered, or only a very small part can be recovered.
Commercial banks should mainly consider the following factors when classifying loans:
(1) The borrower’s repayment ability.
(2) The borrower’s repayment record.
(3) The borrower’s willingness to repay.
(4) Profitability of loan projects.
(5) Guarantee of loans.
(6) Legal liability for loan repayment.
(7) Bank’s credit management status.
When classifying loans, the core should be to evaluate the borrower's repayment ability, with the borrower's normal operating income as the main source of repayment for the loan, and the loan guarantee as the secondary source of repayment.