Calculation method of default rate

Due to the difficulty in measuring the subjective factors of default determination and the imperfect data, we only provide the following information based on the existing data of the bank credit registration consultation system. A method to measure the default rate:

A. Defaulting enterprise number method: reflects the proportion of the number of loan defaulting enterprises

Default rate of a certain credit rating (i) = loan defaulting enterprises in the current period Number of households/total number of loan enterprises at the beginning of the period × 100%

B. Defaulted loan number method: reflects the proportion of loan defaults (default frequency)

Default rate of a certain credit rating (ii)=Number of defaulted loans during the current period/Total number of loans at the beginning of the current period×100%

C. Defaulted loan amount method: reflects the proportion of defaulted loan amount

A certain credit rating Default rate (iii) = Loan default amount during the period/Total loan amount at the beginning of the period × 100%

Loss given default rate LGD refers to the amount of loss that will be caused to the creditor once the debtor defaults, that is, the severity of the loss . From the perspective of loan recovery, LGD determines the degree of loan recovery, because LGD=1-recovery rate

The recovery rate is defined as the recovery amount divided by the loan amount. The recovery amount here is defined as the amount recovered from the auction of collateral, enforcement of the borrower's deposit or other collection methods after the account defaults and is declared unable to repay the debt. Therefore, unless there is collateral, recovery rates are mostly very low. In other words, the size of the loss given default will depend on the characteristics of the collateral.

The issue of the amount of liquidated damages.

If there is a contract, it is stipulated in the contract. The amount of liquidated damages is usually determined based on the amount stipulated in the contract and is paid by the defaulting party to the non-defaulting party. Therefore, you must have signed a loan contract when you took out the loan. , the amount of liquidated damages to be paid should be stipulated under the breach of contract liability clause in the contract. You only need to pay the liquidated damages to the other party according to the amount stipulated in the loan contract at that time and bear the liability for breach of contract.

The relevant legal basis is as follows:

Article 114, paragraph 1, of the "Contract Law" stipulates that when one party breaches the contract, it shall pay a certain amount of liquidated damages to the other party based on the circumstances of the breach. You can also agree on the calculation method for the amount of compensation for losses due to breach of contract.