Risk Management of Credit Facilities in Payments

[Sapphire Capital]

Risk Management of Credit Facilities in Payment Systems

Xianhua Wei
Chinese Academy of Sciences-Graduate University

Song Pan
Chinese Academy of Sciences (CAS)

Song Yang
Chinese Academy of Sciences (CAS)

Min Zhang
Chinese Academy of Sciences (CAS)

Min Chen
Chinese Academy of Sciences (CAS)




Abstract:
This paper summarizes the risk management strategy of the current payment systems. By constructing an independent payment services agency, the paper discusses the cost of default that the payment services agency may bear when supplying credit facilities. By simulating and calculating the unit cost of loan guarantee in settlement cycle, the payment services agency can understand clearly the factors which affect risk management strategies of providing credit facilities. The paper provides an analysis to help the payment services agency choose the best among various feasible risk management strategies of providing credit facilities.

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