Research on Credit Risk Measurement and Management of Commercial Banks in China

Abstract

This comprehensive study explores the sophisticated landscape of credit risk measurement and management within the commercial banking sector of China, a critical component in maintaining the resilience and stability of its burgeoning financial system. As China's economy continues to integrate with the global market, its banking sector faces escalating credit risk challenges, necessitating advanced and effective management strategies. This paper critically examines the existing methodologies for measuring credit risk, including both traditional approaches and modern innovations that leverage big data and artificial intelligence, assessing their applicability and efficiency in the Chinese context. Moreover, we delve into the multifaceted strategies employed by Chinese commercial banks to manage credit risk, focusing on the integration of regulatory frameworks, technological advancements, and best practices in risk management. Through a methodical review of literature and case studies of prominent Chinese banks, this study identifies key trends, challenges, and opportunities in credit risk management. We evaluate the effectiveness of current practices and propose a set of strategic recommendations aimed at enhancing the robustness of credit risk management systems. These include adopting a more holistic approach to risk assessment, leveraging technology to predict and mitigate risk, and fostering a culture of risk awareness and compliance.