Abstract
In this paper, the author analyzed four dimensional evaluation index systems for comprehensive evaluation of risk of carbon finance Business under the low-carbon economy in China. The analysis was conducted by means of an AHP-based Approach which builds a system analysis technique for multiple criteria decision making as well as the weighted LEC method and by market risk, credit risk, operational risk and project risk. The result show that evaluation index system based on AHP Algorithm for comprehensive evaluation of risk of carbon finance Business in China has good reliability.
Highlights
With the arrival of the era of low-carbon, carbon finance has become an important trend in the global financial industry, and boosts the traditional economic updating and transformation
Due to impossibility of avoiding risks or risks nonoccurrence of carbon finance business in commercial banks, this paper sets the minimum probability of risk as 0.1, the maximum probability of risk occurrence as 1, and from 0.1-1in between
Three indexes are closely interconnected with the Market risk B1 and listed as interest rate risk C1, exchange rate riskC2, CERs delivered price riskC3; Credit risk B2contains two indicators listed as contractual capacity on buyer C4, whether CDM projects generates the CERs risk under the contract C5; Operational risk B3 relates to risk of personnel quality C6, technology risk C7, system defects risk C8; Project risk covers cyclical risk of CDM project development C9, domestic risk of examination and approval of CDM project C10, methodology risk for examination and approval of CDM project C11, verification risks C12, registration risks C13
Summary
With the arrival of the era of low-carbon, carbon finance has become an important trend in the global financial industry, and boosts the traditional economic updating and transformation. Strengthening the commercial banking business of carbon finance and risk research has a very important practical significance It is always a focus point on the relationship between financial development and economic growth in theory Beneivenga et al (1991), King et al (1993), Krugman (1995). Miao XiaoYu (2010) argued that the commercial Banks mainly face the following six kinds of risk in carrying out the carbon finance business: market risk, credit risk, policy risk, legal risk, huge opportunity cost risk, loss of control of carbon currency risk. The general idea of this paper is that on the basis of commercial bank’s carbon financial business lines and risk, to evaluate all risks which China’s commercial banks to develop carbon finance business by the methods of AHP-based Approach which builds a system analysis technique for multiple criteria decision making as well as the weighted LEC method and by market risk, credit risk, operational risk and project risk
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