Generally speaking, according to our understanding, credit sinking means that the credit provided by personal credit reports is sinking or the credit system of an enterprise is encountering a risk crisis.

In other words, personal credit is getting lower and lower.

Personal creditworthiness in banks can fluctuate, and there is a saying that credit sinks when creditworthiness decreases.

Credit sinking can be understood as your personal credit being reduced.

1. What does credit risk sinking mean?

Credit risk is default risk.

Finally, since credit risk Internet funds are still in their infancy in my country, the original regulations and supervisory measures related to traditional financial management can no longer adapt to the current situation in many aspects, and various laws and regulations regarding Internet fund financial management are not yet complete. There are many gaps in legal constraints regarding credit risk.

Credit Risk In this imperfect legal environment, the Internet Foundation generates various forms of legal risks.

Although modern network information technology has made financial management services more convenient, efficient and user-friendly, it has also accelerated the accumulation of risks.

2. Credit risk is caused by two reasons.

1. The cyclical nature of economic operations; when the economy is in a period of expansion, credit risk is reduced because stronger profitability reduces the overall default rate.

During a period of economic contraction, credit risk increases because profitability generally deteriorates and the possibility of borrowers being unable to repay in full and on time due to various reasons increases.

2. The occurrence of special events that have an impact on the company's operations; the occurrence of such special events has nothing to do with the economic operating cycle and has an important impact on the company's operations.

For example: product quality litigation.

To give a specific example: when people became aware of the impact of asbestos on human health, product liability lawsuits resulted in the bankruptcy of Johns-Manville Corporation, a well-known leader in the asbestos industry.

repay its debts.

Extended information: Credit risk provides a platform and interface for fund purchases for its Internet customers; fund companies are issuers and sellers of funds; Internet customers are registered customers of Internet platform companies, and credit risks are buyers of funds.

Taking Yu'e Bao as an example, Yu'e Bao involves three direct entities in its operation: Alipay Company, Tianhong Fund Company and Alipay customers.