Theory Based On Capital Strucure Of Investment Banking Risk Management

In October 2008, Alpha Bank &Trust has been shut down by the U.S. authorities , becoming the collapse of the sixteenth bank in the sub-prime mortgages crisis. Investment banks was serious impression by the sub-prime mortgages, the same is :With a higher financial leverage .The first dimensional credit crisis, investment bank Bear Stearns collapse, with the total assets and shareholder's equity ratio as high as 16.While a high debt management can improve the return on investment, but it will certainly bring about greater financial risk.As financial institutions must follow the safety, liquidity and profitability of the "nature" , liquidity is the lifeblood of financial institutions. Lack of liquidity, financial institutions will be faced with liquidity risk or liquidity crisis, and thus subject to tremendous losses or even bankruptcy.The analysis of the liquidity should be considered with its relatinonship with benefits. Liquidity and is closely related to income, reflected in two aspects.On the one hand, liquidity refers to the solvency of the size, the higher debt levels, corporate liquidity worse, while the debt level will affect the size of the enterprise proceeds. The other hand, the liquidity of assets, refers to the liquidity of assets, Under normal circumstances liquid assets, its earnings lower. For the former, we adopted the analysis of capital structure launched,The latter through the structure analysis of assets started. Capital structure is controllable internal factors, as reflected in corporate financial leverage with debt levels, its research investment banks could make a better liquidity risk analysis. We cannot analysis capital structure without capital structure theory.Based on this, the topics of investment banking, taking into account the special conditions of risk, from the perspective of the capital structure of its financial leverage and ROE analysis, trying to find domestic and foreign investment bank financial leverage and return on equity between the two there is the relationship between And on this basis, a detailed analysis of China's investment banking asset structure, liquidity risk management to achieve on a comprehensive study Then, in front based on the analysis of the U.S. investment bank executives to take high financial leverage to evaluate and summarize its lessons for China's investment banking risk management advice.