Study On The Liquidity Of Chinese Commercial Bank

In this essay, we focus on the liquidity of commercial bank. We analyzed the definition of liquidity, the definition of the commercial bank, and the definition of the liquidity of commercial bank. And then, we analyzed the liquidity theory, and how to estimate the liquidity of commercial bank.The principal part of this essay is to found the liquidity function of commercial bank. The base of the liquidity function is utility function, and the main body is the commercial bank. We got the conclusion by suing the liquidity function: first, the basic reason that the commercial bank must keep the liquidity is because of the nature of commercial bank. The commercial bank is the intermediary of finance market; second, the reason is that the commercial bank is often faced with bank runs.Next, we analyzed the factors of the liquidity of the commercial bank. We got the conclusion: first, the commercial bank must pay costs for the liquidity; second, the source of deposit is stable, at the time, the loan is variable. That is to say, the credit condition is variable. The relation between the cost of liquidity and wave motion of the credit condition is direct proportion; third, the relation between liquidity of commercial bank and the degree of the existence of capital transform market is direct proportion; fourth, the source of the deposit is stable. When the commercial bank with the government fame, it pays little liquidity cost; and when the commercial bank with no government fame, it pays more liquidity cost.The last part of this essay is an analysis on Chinese banking liquidity conditions. We use each bank 's public financial data for our analysis, with trend analysis and cross-sectional analysis. We use four state index, we found that the liquidity character of Chinese banking system is linked to the system's structure: banks of different type and size show different liquidity features. On the analysis about deposit, we analyzed the factors of the liquidity of Chinese commercial banks. Then, on the base to conclude the whole essay, we put forward the suggestion on how to strengthen the liquidity of commercial banks. We hope that our essay have the positive meaning to Chinese commercial banks.