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Open Economy, China's Commercial Banks To Liquidity Risk Management Study

Posted on:2006-11-05Degree:MasterType:Thesis
Country:ChinaCandidate:L ZhangFull Text:PDF
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1.Main contents and viewpointsBesides the preface, this thesis consists of five chapters.Chapter one is the theoretical basis of the thesis. It mainly introducessome basic concepts and the theoretical frame. It is divided into threeparts. Part one introduces the definition of liquidity of a commercial bankand the definition of liquidity risk given the relationship of liquidity andprofitability. The thesis argues that liquidity is the ability of commercialbanks to liquidate its assets or finance from the outside in time at suitableprice. After that, the thesis introduces how liquidity risk can come intobeing and what it will look like. Part two introduces the theory ofmanaging bank liquidity risk based on ALM, which is asset and liabilitymanagement. In this part, the thesis introduces a few kinds of theoreticalmethods to manage liquidity risk, such as Commercial Loan Theory,Asset Shiftability Theory, Anticipated Income Theory, Bank NotesTheory, Deposit Theory etc. And also, it introduces the liquidity reserveand liquidity buying for commercial banks. Part three introduces therelationship among liquidity, liquidity risk management and liquidity risk,pointing out that, in the long term, enhancing the ability of managingliquidity risk is the most important way for a commercial bank to keepaway from liquidity risk.Chapter two analyses the liquidity status of commercial banks in China.This chapter is divided into two parts. The first part, based on tbeoreticalaspect, analyses the mechnisms of liquidity alteration in commercial banksystem in the surrounding of open economy. It introduces that how theliquidity of commercial banks expand with the currency supply in thecourse of fast growth of foreign reserve. Theoretically speaking, bygiving an influence on the supply of base currency the foreign reserve canhave a great impact on the total supply of currency with which it caneffect the liquidity status of the bank system. Part two introduces the realliquidity changes of commercial bank system in China. And this partexplains how the PBOC can sterilize, by open market operation, the overliquidity of commercial banks from the course of expanding of theforeign reserve in China.Chapter three analyses the causes of liquidity risk in commercial banks ofChina. This chapter consists of six parts. The first part mainly analysesthe asset quality of commercial banks as to demonstrate the liquidity riskthat the commercial banks may suffer. The second part analyses theconsists of the asset and its term structure from which we can tell that ourcommercial banks' asset structure is unsuitable. The third part analysesthe ratio of liquidity asset to total asset of commercial banks todemonstrate its liquidating ability. The forth part introduces the liabilitystructure to inspect the stability of the fund source of commercial banks.The fifth part analyses the ratio of loan/deposit to demonstrate the burdenof fund use on fund source for commercial banks. In the last part, itanalyses the term mismatch of the asset/liability to study the potentialliquidity risk of commercial banks.Chapter four, based on the management aspect, analyses the lacks inliquidity risk management of commercial banks from the angles of riskresistance, ALM, inner control system and currency market etc. Thischapter consists of three parts. The first part introduces the measures thecommercial banks have taken to manage liquidity risk from the angles ofinner control index and market surrounding construction. The second partanalyses some problems in the liquidity risk management of ourcommercial banks. Firstly, the thesis compares the liquidity riskmanagement pattern of China's commercial banks with that ofinternational banks. Along with it, it points out that many commercialbanks lack the awareness of keeping a lookout at liquidity risk. After that,the thesis study the lacks in ALM of commercial banks, pointing out thegap of efficiency in management between China and develop countries.And also, the thesis analyses the lacks of currency market in managingliquidity...
Keywords/Search Tags:commercial bank, liquidity, liquidity risk management, open economy
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