A Study On Application Of Economic Capital Management In China Commercial Banks

Commercial bank is special financial company which supports currency. High operational risk is one of its features. Capital represents the ability to resist risk of commercial banks as its risk buffer. In recent years, the study on capital management system of commercial bank has increased and the investigation, especially the commercial banks pay more and more attention to the economic capital management system. As the economic capital management is applied more and more widely, it has become the generally accepted international banks risk management system.Along with the implementation of the "New Basel Capital Accord", the concept of regulatory capital has enhanced and modified, which provided a new model for banks to follow. In order to meet the "New Basel Capital Accord " requirements and enhance the competition, commercial banks in China are actively introducing the concept of economic capital management, and gradually used in daily operation and management.This article is divided into five parts. Chapter one introduces, including background and significance, literature reviews, research structure and methodology, innovations and shortages. Chapter two is the theory and methods of economic capital management. First introduce the concept of economic capital, the basic principle of economic capital measurement and the economic capital management system. And then introduce the economic capital measurement, allocation and performance evaluation methods in detail respectively. Chapter three is comparative analysis of economic capital management between China and western countries'commercial banks. Selected four advanced Western commercial banks, introduce their economic capital measurement, allocation, and performance evaluation methods. Then introduce the practice on economic capital management in China commercial banks, and compared with the western banks. Chapter four is application analysis of economic capital management in China commercial banks. Take a domestic commercial bank as an example, analyzes its application of the economic capital measurement, allocation, and performance evaluation methods. Chapter five is countermeasures on economic capital management in China commercial banks. Point out the shortages in practice and provide the countermeasures for perfecting economic capital management.