The Impact Of The Financial Instruments Accounting Standards On Commercial Banks' Capital Management

Financial instruments accounting standards proposes to manage the assets on balance sheet according to the four types classification methods, which brings some of financial assets originally accounted off balance sheet into the balance sheet , and introduced the Fair value measurement, as well as the discounted future cash flows method, etc. These rules make the fluctuations of interest rates , exchange rates and stock prices directly influence the recognition of financial assets or liabilities held by commercial banks, which will be reflected in the commercial bank's income statement and balance sheet and eventually make an impact on the commercial bank's capital. This means the implementation of financial instruments accounting standards make the capital of the commercial banks tightly connected with the complicated capital market and macro-economic situation through the accounting rules.On the basement of qualitative study, taking the PuDong development(SPD) bank's capital adequacy ratio as the research subject, this article compares the change of capital adequacy rate under the new accounting standards versus the old one from the end of 2006 to the mid-2008, and analyses the impact of the new accounting standards especially the implementation of financial instruments accounting standards on the capital. In the situation of unpredictable movements (trends) for interest rate and exchange rate , the accounting concept of four types categorizing for the bank's assets has changed to the balancing of relationship between the liquidity and safety(capital adequacy ratio management).This four types classification method ( policy) has further be converted to the coordination and balancing of liquidity ,safety and profitability, which has become part of the bank's financial management regulation. The implementation of financial instruments standards not only changes the prevailing accounting rules, but more importantly it directly influences the ways of the SPD bank's operation management.Based on the theoretic analysis and qualitative conclusion research , verifying the conclusion by combing the SPD bank's actual practice, this article try to made the conclusion more convincing.