What Is Bank Credit Risk?

Credit risk refers to the risk of counterparty failure to perform due debts. Due to different settlement methods, the credit risks involved in on-site derivative transactions and over-the-counter derivative transactions are also different. ^[1]

credit risk

Credit risk refers to the risk of counterparty failure to perform due debts. Due to different settlement methods, the credit risks involved in on-site derivative transactions and over-the-counter derivative transactions are also different. ^[1]

Credit risk

Credit risk is

Credit risk has four main characteristics: 1. Asymmetry: The expected return and expected loss are asymmetric. When an entity bears a certain amount of credit risk, the expected return and expected loss of the entity are asymmetric.

2. Cumulativeness: The cumulative nature of credit risk means that credit risk has the characteristics of continuous accumulation, vicious circle, chain reaction, and a sudden outbreak beyond a certain critical point, causing a financial crisis.

3. Non-systematic: Compared with market risk, credit risk observation data is less and difficult to obtain, so it has obvious characteristics of non-systematic risk.

4. Endogenous: Credit risk is not completely driven by objective factors, but is subjective, and cannot be confirmed by objective data and facts.

Features of credit risk 1. Risky

Credit risk for banks,

Lenders use the following methods to mitigate credit risk:

1. Credit risk has an impact on both sides of the debt formation, mainly on

   There are multiple ways to manage credit risk. The traditional approach is to standardize loan review and

   In credit management, in order to avoid credit risk, the following principles should be followed: The principle of symmetry. The repayment periods of assets and liabilities of financial institutions should maintain a highly symmetrical relationship, and both assets and liabilities must have appropriate maturity periods. The allocation of assets and the length of the period shall be determined according to the period of the source of funds or the speed of circulation. The principle of asset dispersion. When financial institutions invest funds in securities or lending, they should pay attention to selecting multiple types of securities and lending, and try to avoid concentrating funds on a certain type of securities or lending. As in

   Tang Jian has used his father's and third-party accounts to buy Xinjiang Zhonghe (the Shanghai Exchange

   (Code: 600888). (His father bought nearly 60,000 shares with a profit of nearly 290,000 yuan, and another account bought more than 200,000 shares with a profit of more than 1.2 million.) This is commonly known as the "mouse storehouse", and it is also a typical suspected crime of insider trading.

   Xinjiang Zhonghe is the darling of investment in the fund industry under the background of the nonferrous metal market in 2006. A number of funds on SZMorgan have held Xinjiang Zhonghe, including SZMorgan Double Interest Balanced Hybrid Fund, Alpha Equity Fund, China Advantage Fund, and Growth Pioneer Fund established on September 20, 2006. Prior to becoming a Growth Pioneer Fund Manager, Tang Jian was Assistant Fund Manager at Alpha. Xinjiang Zhonghe's stock price was about 17 yuan per share at the end of September 2006, and then skyrocketed until it was around 28 yuan per share.

   At the beginning of 2007, the Fund Department of the China Securities Regulatory Commission issued the 2007 Document No. 1, which required fund companies to report the ID numbers and securities accounts of employees and their immediate family members. Increase sanctions. Although this has been interpreted by the outside world as the supervisory authority is establishing a monitoring system for the fund manager's "rat warehouse", it has not attracted sufficient attention within the fund industry. In fact, it was from this time that the behaviors of Tang Jian and others were gradually incorporated into the supervision field.

   On the afternoon of May 16, 2007, Shanghai Investment J. Morgan Fund Management Co., Ltd. stated that the former Tang Jian, the former Shanghai Investment J. Morgan Growth Pioneer Equity Securities Investment Fund Fund Manager, was suspected of using the information he obtained to conduct illegal investment activities and failed to report personally and his family members Investment behavior, deceiving the company, seriously violated the company system. On May 15, 2007, the company was relieved of Tang Jian's Growth Pioneer Fund Manager and all other positions and dismissed.