Research And Analysis, The Excess Liquidity Of Commercial Banks In China

The problem of liquidity had become a prominent issue of Chinese economic operation in just passed 2006.In a lecture at the end of 2006,Li Yang ,the director of Finance Research institute of Chinese Academy of Social Sciences, his speech had the quite general, he said ,"If summed up current macroeconomic ,the essential feature of financial form with a word, should be without doubt that is the liquidity surplus". Ba Shusong ,the professor and assistant manager of Finance Research institute of State Council R&D center ,gave verdict:" The first important matter of the currency regulation of Central Bank is suppression liquidity surplus in 2007" .Simultaneously, the monetary policy execution report of People's Bank of China's also proposed that we will continue to carry out the steady monetary policy, improve the financial macroeconomic regulation further, enhance the liquidity management, control the currency credit growth reasonably in 2007. Moreover, at the beginning of 2007, the liquidity surplus problem has been interpolated to the government service report for the first time. Wen Jiabao ,the State Council Premier , pointed out the alleviation liquidity surplus contradictory is the current even the whole year macroeconomic regulation and control key point in April 18, in 2007 State Council routine conference. The concerned expert believed that the central authorities may carry on the comprehensive reform this year, solving the liquidity problem of our country economy movement fundamentally. Our country's liquidity surplus mainly displays in the commercial bank system. Under this background, To our commercial banks liquidity surplus question performance,the influence, the origin thorough analysis as well as to proposed the solution suggestion are the goal of the article.In this paper, we overview the existing literature firstly, under the existing terms of literature , many articles had discussion without conducted on the liquid itself to a clear definition. Because liquidity oneself includes the multi-layered meanings, if enters the analysis directly, may cause some misunderstanding unavoidably, this paper decided to give "liquidity " a reasonable and clearly defined at the beginning, and then defined the liquidity surplus. Then from a point of quantitative, selected money supply, loan-to-deposit and loan-to-deposit ratio and the excess of the reserve as analysis object. Combining historical data and indicators to inspect commercial banks of the situation of liquidity surplus, through the analysis of the statistical data, we obtained that commercial banks do exist liquidity surplus situation.The influence of liquidity surplus of the commercial bank to our country economy is various. The liquidity surplus without doubt has the negative influence to the commercial bank profit ability,weaken the effectiveness of the central bank's monetary policy, also lower social capital utilization efficiency,impact of the capital market and even implied financial crisis. But we also must see the liquidity surplus also is an opportunity which we must seize, make full use of excess liquidity, display the positive influence of the liquidity surplus, including promotion economy development and reforming as well as expansion capital market scale and structure,Promotion industry upgrading and expanding public services,adjustment property structure, broaden the use of channels, innovation service variety and so on.Next discussed the reasons for the liquidity surplus. The one analysis of foreign exchange reserves to the impact of liquidity, Sustained trade and capital projects double favorable balance makes rapid increase in foreign exchange reserves. Due to the rapid growth of foreign exchange reserves we should issue the base currency sharp increase correspondingly, this is the main cause of the liquidity surplus of commercial bank. Then, introduced the high savings ratio excessively, underdeveloped financial market, a large number of non-performing loans stripping, operating philosophy and the mode of operation of commercial banks changed, the reasons for the banks internal control and the unceasing growing valuable bond of the non-banking financial institutions separately. Under these reasons, except two reasons of the foreign reserve and valuable bond of non-banking financial institutions, Other reasons all may regard as the policy aspect reasons. Using these two variables and the gap between loan and deposit which is the expression of liquidity, we conduct of empirical analysis. The results showed that foreign exchange reserves and the valuable bond of non-banking financial institutions are the reasons for the gap expands unceasingly. This conclusion has also confirmed our previous qualitative analysis.There are many methods to solve the liquidity surplus in the existing literature. In this paper, drawing on the basis of these methods, we can suppress liquidity surplus from the two aspects. We can reduce the liquidity origin and unblock the liquidity. From the origin, strengthen the management of foreign exchange reserves. From the outlet, we should do: improvement finance ecological environment, increasing the domestic demand, converting commercial banks operating philosophy.