Research On Liquidity Risk Of Chinese Commercial Bank

The topic so called"liquidity surplus"has become a key word which is discussed more than any other one since the beginning of 2006. At present the prosperous scene of the real estate market and stock market provide excellent footnotes for this kind of surplus. The currency authority also pays attention to this phenomenon. Our country's foreign exchange reserve is increasing sharply due to the surplus of the current account and the capital and financial account. So sterilizing the abundant liquidity is becoming a tough task of the monetary policy. The phrase of"liquidity surplus"is used in six kinds of meanings while achieved mutual recognition, and these six kinds of meanings are all related with commercial bank. So the commercial bank's liquidity problem is being put on an important place.In recent years, People's Bank of China raises reserve requirement ratio and the benchmark interest rate of lending and deposit Renminbi of financial institutions and issues central bank bills in order to sterilize the excess liquidity coming from foreign exchange market. Through the frequency and strength of People's Bank of China's policy, we can understand the serious degree of current liquidity problem and the determination of currency authority to settle this problem. This article adopts the most recent data to discuss our country's commercial bank's liquidity based on this background on two aspects: from the theory to practice. The main content of this paper is formed by our parts: theoretical analysis about the liquidity risk, the commercial bank's liquidity management theory, the present situation analysis of our country's commercial bank liquidity and the author's opinions on the liquidity management.The first part draws out the liquidity risk concept on the foundation of finance risk, and points out that the liquidity asset is not equal to the liquidity ability. On one hand as a result of commercial bank intrinsic vulnerability, there is possibility that a bank suffers losses because of liquidity risk; On the other hand, through the analysis on the infection effect of liquidity risk, we know that it is necessary to carry on some kind of regulation on commercial bank's liquidity ability.The second part introduces commercial bank's liquidity management theory. Theory of Commercial bank's liquidity management, which has been developing on the base of commercial bank practical management practice, has experienced the long-term evolution. The first stage is the asset management stage. During this stage, managers believe that the bank's profit mainly lie in the asset operation, so the most important point of the liquidity management lies in the proper arrangement of asset. The second is the liability management stage. The liability management theory thought that if the bank's fund resource can be controlled, it will never encounter a liquidity problem. Under the liability management theory, commercial banks should buy funds from the financial markets whenever necessary. The acquisition of funds at the lowest possible cost then became an active part of bank financial management. The third is the asset liability management stage. The basic opinion of this theory is that it is necessary to keep some kind of balance between the asset and liability to satisfy the three principles of commercial bank management.The third part is a concrete analysis of our country's commercial bank's liquidity situation now. Through a compressive analysis, a asset liquidity analysis (loan proportion, non-performing loan rate and cash asset ratio) and a liability and ownership analysis (deposit proportion and capital sufficiency of capital), the paper makes a conclusion that, the liquidity surplus is a constitutive problem in our country's commercial bank. Then it carries on the analysis of the cause of liquidity problem through two aspects: the source of capital and the utilization of capital. The fourth part is the author's opinion about our country commercial bank's liquidity management. To solve the commercial bank's liquidity problem, the author thought we should make innovation from three layers: macro financial environment perspective, industry perspective and micro financial product perspective.As the most important part of one country's financial institutions, its operating state affects the development of the macro economy. During the key period of the financial and economy reform of our country, how to build an effective risk management system and how to strengthen the financial regulation reasonably are becoming the popular topic now. Among the three principles of commercial bank management, liquidity should be put on the first place and it is an important symbol of the level of commercial bank management. Liquidity is not only a necessary condition of the commercial bank's daily operation, but also a kind of guaranty of the entire economy system's needs toward liquidity. This very point is why this paper has been written.