Research On Liquidity Management Of Chinese Commercial Bank

Liquidity risk is the risk that commercial bank is facing every moment. Once it broke out, it will not only directly lead to bank runs and payment crisis, but also lead to the bankruptcy in serious circumstances. Through flexible adjustment of the structure and period of the commercial bank's assets and liabilities, liquidity management can effectively guard against and dissolve liquidity risk, avoid bank runs and payment crisis, also can coordinate the liquidity and profitability of the bank, making the bank have long-term survival and development in fierce competitions. So it can be said that liquidity management is the core and essence of the commercial bank's operating management.With the prosperity of macro-economy in recent years, China's banking system showed a significant excess of liquidity. But this does not mean that there is no liquidity risk in Chinese commercial bank and all levels commercial banks have ample liquidity. Behind the liquidity surplus the potential liquidity risk which triggered by macroeconomic periodic change, the problem of non-performing assets and many other factors remains very serious and may convert to real liquidity crisis at any time if these factors deteriorated.And the most important thing is many problems which exist in bank's understanding of liquidity risk and liquidity management were all temporarily covered up. These all need Chinese commercial banks have a sober understanding, correctly view its liquidity condition, and earnestly strengthen and improve their liquidity management to deal with the sudden liquidity pressure.But it is worth noting that Chinese commercial bank's liquidity management start much later and the overall management level is not high. So there is great practical significance to analyze the problems and shortcomings existed in Chinese commercial bank's liquidity management and to find solutions, on the basis of introducing development status and characteristics of the foreign commercial bank's liquidity management and integrating with current status of our country.The body of this paper is divided into four chapters:The first chapter is the introduction of theory and practice of commercial bank's liquidity management. This chapter is divided into two parts; the first part is the comprehensive introduction of the theory of liquidity management, which elaborates on the definition of bank's liquidity, liquidity risk, as well as the causes of the liquidity risk, the essence and objectives of liquidity management. The second part introduces the main content of bank's liquidity management from the perspective of internationally common use, which gives detail demonstration from the angles of making liquidity plan, forecasting liquidity and choosing liquidity management strategy.Chapter II makes a profound analysis of excess liquidity of the Chinese banking system and the need for liquidity management. This chapter is divided into three parts; the first part analyzes the liquidity surplus phenomenon existing in Chinese banking system from three indicators, such as the difference between deposits and loans, and points out the impacts of liquidity surplus on the operation of commercial bank and the whole real economy. The second part makes a profound analysis of potential liquidity risks behind the liquidity surplus, with the view of the serious potential liquidity risks coming from the non-sustainable reason for liquidity surplus and many other factors, and different levels of commercial banks are facing different levels of liquidity risk because of their different liquidity conditions and government support. The third part shows the needs to strengthen and improve Chinese commercial bank's liquidity management according to the analysis of the first two parts.Chapter III is the core part of this paper, which focuses on the comparative analysis of Chinese and foreign commercial bank's liquidity management. This chapter contains four parts. The first part introduces the development status of liquidity management of developed countries'commercial banks, and summaries its characteristics and development trends.The second part introduces the regulatory environment of Chinese commercial bank's liquidity management, and makes a profound analysis of the features of Chinese commercial bank's liquidity management. The third part summaries the problems and shortcomings existed in Chinese commercial bank's liquidity management, such as the lagged guiding ideology, and so on. The fourth part makes further analysis of the factors that currently constrains Chinese commercial bank's liquidity management.Chapter IV is about the measures and proposals of strengthening liquidity management of Chinese commercial banks. It is mainly integrating advanced experiences of developed countries with China's actual situation to solve the problems in a targeted manner according to the problems and constraints put forward by the last chapter. This chapter contains three parts. The first part suggests improving the monitoring system of liquidity management from reforming and improving relevant laws and systems, establishing deposit insurance system and so on. The second part proposes to raise liquidity management level from perfecting liquidity management mechanisms, vigorously promoting financial innovation and so on. The third part suggests speeding up the construction of external environment of liquidity management from promoting the development of financial markets and speeding up market-oriented interest rate reform.