Research on Credit Strategy of Small and Medium-sized Banks based on RAROC

In the context of the business world, small, medium and micro enterprises represent the downstream of numerous industries within our nation. Consequently, it is of paramount importance to conduct credit risk analysis and research into credit strategies. The present paper employs mathematical modelling to quantitatively analyse the credit risk of enterprises, thereby obtaining the credit strategy of banks to enterprises and the credit adjustment strategy in the face of unexpected factors. The paper quantitatively analyses enterprise credit risk and provides the credit strategy of banks to enterprises, using the fuzzy comprehensive evaluation method to conduct qualitative and quantitative analysis of credit risk. The data presented in Annex I delineates the factors employed in this study, which include default record, credit rating, average monthly operating fund flow, average monthly profit, and average monthly profit growth rate. The evaluation set is determined based on the five-level classification system of loans: normal, concern, secondary. possible, loss; average combination weights is adopted to define the factors affecting the weight for A = [0.2096, 0.4285, 0.1639, 0.0971, 0.1009].Finally, the fuzzy evaluation matrix is obtained by scoring, and the credit risk of enterprises is obtained by matrix operation. The credit risk monitoring model based on RAROC (risk-adjusted return on capital) is used to determine the credit strategy, and the RAROC value of the enterprise is calculated by consulting the data.Through fitting, the relationship between customer churn rate and loan interest rate is obtained, attenuation factor B is introduced and multiplied by RAROC value, which is the return on capital reward. The reward is then divided into seven intervals, with the range of corporate loan limits and loan interest rates maintained constant within each interval.