The Study Of Asset Liability Management Of Commercial Banks In China Under The Basel Framework

The late-2000s financial crisis has fully revealed the deficiencies of bank capital regulations, which brings about the Basel â…¢ in year2011. This new Basel Accord introduced more stringent regulatory measures, including strengthened bank capital and liquidity requirements, decreased leverage ratios. These initiatives of reform are to promote the steady operation of commercial banks, which also have made profound influence to asset and liability management of commercial banks.On the basis of Basel â…¢ implementation practice in China, the article analyses the recent situation of asset and liability management of commercial banks in China from the following aspects, the amount and structure of assets and liability, capital management, liquidity management and pricing management.The study shows the asset liability management has become gradually emphasized and improved. However, under the Basel III framework, the asset liability management is still being inactive, with the difficulty of objective coordination, unreasonable structure, and limit measure of risk hedging. The fully implementation of Basel â…¢ has significant influence to the structure of asset liability of commercial banks in China, which forces banks to seek more funding and investment channels, and reduce the dependence of asset and liability. On the other hand, the full implementation of Basel â…¢ has exerted more pressure to bank capital adequacy, which reflects the weaknesses in capital supplements, imperfect meticulous management of risk assets and internal regime of capital management. Moreover, strengthened capital regulations have also led to the behavior alienation in asset and liability management, as well as bringing the great challenge in liquidity management. Although the pricing ability of commercial banks has been improved in the process of interest rates liberalization and reform, the pricing management are still weak. In concludes, there still exists a gap between the actuality and the requirements of Basel â…¢ in the concepts, methods and instruments of asset and liability management of commercial banks in China.In order to adapt to the new situation brought about after the implementation of Basel â…¢, the commercial banks of China should take the advantage of it, accelerating the transformation of concepts and thoughts, and speeding up the reform and innovation to establish a more robust and sustainable asset and liability regime.