1. Meaning of credit risk:

Credit risk refers to the possibility that a bank will suffer losses due to uncertainties in credit activities, specifically, all risks caused by customers' default.

For example, in asset business, the quality of assets deteriorates due to the borrower's inability to repay debts; Depositors in debt business withdraw a lot of cash to form a run, and so on.

2. Causes:

Credit risk is the possibility that the borrower fails to repay the debt or bank loan in time and in full for various reasons and defaults.

in the event of default, creditors or banks will bear financial losses because they fail to get the expected income.

credit risk is caused by two reasons.

(1) periodicity of economic operation:

In the period of economic expansion, the credit risk is reduced, because the overall default rate is reduced due to strong profitability. In the period of economic contraction, the credit risk increases, because the overall profit situation deteriorates, and the possibility that borrowers cannot repay in full and on time for various reasons increases.

(2) The occurrence of special events that have an impact on the company's operation:

The occurrence of such special events has nothing to do with the economic operation cycle and has an important impact on the company's operation. For example, when people know the fact that asbestos has an impact on human health, the product liability lawsuit caused a well-known company in the asbestos industry to go bankrupt and could not repay its debts.

Extended information:

1. Credit risk has four main characteristics:

(1) Asymmetry: expected income and expected loss are asymmetric. When an entity bears certain credit risk, the expected income and expected loss of the entity are asymmetric.

(2) Cumulative: Cumulative credit risk means that credit risk has the characteristics of continuous accumulation, vicious circle, chain reaction and sudden outbreak beyond a certain critical point, which will cause financial crisis.

(3) Non-systematic: Compared with market risk, the observed data of credit risk are few 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 has subjective characteristics, and cannot be confirmed by objective data and facts.

2. Characteristics of credit risk:

(1) Potential risk. Many enterprises that evade bank debts know that they can't repay them. For example, many state-owned enterprises have no intention to repay them when they decide to borrow from banks. According to the survey, the average asset-liability ratio of state-owned enterprises is as high as 8%, of which more than 7% is bank loans. This kind of high debt has caused the low efficiency of enterprises, and the potential risks are increasing day by day.

(2) the long-term nature of the risk. The change of ideas is a long-term and subtle process, especially at present, the process of China's transition from planned economy to market economy will be a long-term pain. It takes several generations to cultivate the "contract" rules between banks and enterprises and establish an effective credit system.

(3) the destructiveness of risks. When the ideological and moral standards are corrupted, things will get worse and worse. After the formation of non-performing assets, if the enterprise is in a cooperative attitude, the losses of both parties will be reduced to a minimum; However, in this case, many enterprises often choose to ignore and hide, which makes banks spend a lot of manpower, material resources and financial resources and can't make up for the losses.

(4) the difficulty of control. At present, the measures to deal with non-performing assets of banks are lagging behind, which is related to the definition of non-performing assets of banks, and also related to the incomplete unification of bank credit risk prediction mechanism, transfer mechanism and control mechanism. After the emergence of non-performing assets, various remedial measures are taken, and the results are often useless.

Baidu Encyclopedia-Credit Risk

Baidu Encyclopedia-Commercial Bank Risk