The Risk Management of Commercial Banks

Abstract

Commercial banks are not only the largest service sector of the real economy, but also the "bellwether" of financial industry in various countries. Their risk management has always been the focus of academic attention and hot discussion. The article reviews eight studies and discusses four main risks with their managements existed in commercial banks. The review of the four risks, interest risk, credit risk, liquidity risk and operational risk, summarizes the different methods and factors on the risk managements in commercial banks. Diverse risks have quite different methods. Some of these methods are well-established in the field of economics, whereas others are innovative, which can be examined in conjunction with other disciplines, but still need adequate empirical evidence to support them. These novel models are deserving of research and application to various forms of risk management. Moreover, some authors proposed correspondingly specific measures of risk management for commercial banks and government policymakers, while others did not.