RISK MANAGEMENT IN CHINESE COMMERCIAL BANKS

Abstract

In recent years, with the acceleration of global economic integration and the continuous adjustment of China's domestic economic structure, commercial banks have assumed an increasingly vital role within the financial system. Commercial banks, as pivotal participants in economic activities, play a crucial role in facilitating capital flows and supporting the development of the real economy. However, they are confronted with an increasingly intricate and erratic risk environment. The international financial crisis has demonstrated that the risk management capabilities of financial institutions have a direct impact on the stability and security of the financial system. In the context of China, the progression toward interest rate liberalization, the emergence of financial innovations, and the escalating intensity of market competition pose novel challenges and opportunities for the risk management of commercial banks. Conducting in-depth research on risk management issues in Chinese commercial banks is of significant practical importance. A substantial body of research has emerged on the subject of risk management in Chinese commercial banks, with both academic and practical contributions yielding notable results. On the one hand, scholars have extensively explored the identification, measurement, and control of various risks faced by commercial banks. These risks include market risk, credit risk, and operational risk. In response, scholars have proposed multiple risk management models and methodologies. Examples include the application of the Value at Risk (VaR) model in market risk measurement and the use of credit rating models in credit risk assessment. Conversely, extant research has underscored the significance of organizational structures, internal controls, and corporate governance in the prevention and control of risk for commercial banks. Moreover, with the advent of fintech, the application of technologies such as big data and artificial intelligence in risk management has emerged as a prominent research subject. Nevertheless, despite the advancements witnessed in both theoretical and practical domains, residual deficiencies persist.