Liquidity Management Of Commercial Banks In China

Although liquidity management plays a significant role in the operation ofcommercial banks, it is usually ignored by the bank operators, which leads to serioussequence ultimately. Along with more attention paid to liquidity management in theinternational banking industry, it obtains the growing development eventually in thecommercial banks in China. In recent years the emergence of "liquidity surplus" incommercial banks makes that the liquidity scarcity seems no longer exists. So is itnecessary to emphasize the importance of liquidity management? This paper analyzesthe phenomenon of "liquidity surplus" from the qualitative perspective, points out thatthere is hidden trouble of liquidity in the commercial banks in China, and appropriateliquidity management must be carried out, otherwise much greater risks would beaccumulated, which threaten the safety of the whole financial system. In the end ofpaper, advice is provided about how to improve the level of liquidity management onthe basis of analysis on present situation of liquidity management in China. And thepaper also stresses that mortgage-backed securitization would be one of the effectivemethods to solve the liquidity trouble of banks.