Research On Economic Capital Management Of Urban Commercial Banks From The Perspective Of Interest Rate Marketization

The commercial bank is a special enterprise based on management of credit and risk, and its capital and its capital’s adequacy are the premise of its reserving buffer against its risk and safety. Basel Capital Accord Ⅰ has promulgated since 1988, Capital Adequacy Ratio is as the core of the commercial bank’s supervision indicators by regulatory authorities, and thereafter Basel Capital Accord Ⅱ and Basel Capital Accord Ⅲ are continued to improve and deepen the revision process, the management of capital and risk of the commercial bank are closer. Administrative Measures for the Capital of Commercial Banks(for Trial Implementation) is put in force in January 2013 by China Banking Regulatory Commission, in order to promote gradually the comprehensive management system of risk and capital of commercial banks in China with the establishing of Economic Capital’s management as the core tools.At present, the market environment, regulatory environment and competitive landscape of commercial banks have changed dramatically, and the dual pressures of business’ management and risk’s management have become increasingly prominent, therefore, it has become a common concern of the various commercial banks in China that the capital’s consumption can bring out real value creation whether or not. It will be considerably practical significant and application valuable to enhance the capabilities of risk’s management, and achieve business’ transformation gradually as the goal of Economic Capital’s management for ZJY Commercial Bank under the macro circumstances which the interest rate liberalization is accomplished basically in China. This paper carry out detailed analysis about the capital’s management project layout of ZJY Commercial Bank that is in accordance with the relevant norms of Administrative Measures for the Capital of Commercial Banks(for Trial Implementation) and the development of measurement model for credit risk, to provide specific practical ideas for the small city commercial banks like ZJY Commercial Bank about Economic Capital’s measurement, allocation and related performance evaluation and assessment, etc.First, the development of the Basel Capital Accords and the change of regulatory request of Capital Adequacy Ratio in China are counted for, and the domestic and aboard studies about Economic Capital’s management are combed, and the related theories about the interest rate liberalization are introduced briefly.Second, based on a brief introduction about Economic Capital’s management system of commercial banks and regulatory request of Capital Adequacy Ratio in China, distinguishing different types of commercial banks, this paper illustrates and summarizes separately State-owned Large Commercial Banks, joint-equity commercial banks and city commercial banks about their typical Economic Capital’s main aspects.Third, the effect of SHIBOR to the interest rate liberalization in China is analyzed, and the role of SHIBOR in the reform of interest rate is described. The trend of interest rate of deposit and loan is forecasted with the interest rate liberalization accomplished by the change current of SHIBOR of different time limit and different variety, and different period, in view of the development of the interest rate liberalization in China and its impact on commercial banks, and this paper elaborates the influence of the interest rate liberalization in China to Economic Capital’s management in three aspects: Credit Risk, Market Risk and Operational Risk.Forth, in accordance with the status of the capital management of ZJY Commercial Bank, this paper analyzes the effect of the interest rate liberalization in China to ZJY Commercial Bank’s Credit Risk, Market Risk and Operation Risk related its Economic Capital’s management, and puts forward the management project of ZJY Commercial Bank which include the measurement scopes and Economic Capital’s techniques of Credit Risk, Market Risk and Operational Risk, Economic Capital’s performance assessment and evaluation about Credit Risk on the basis of the Internal Coefficient Method and Internal Rating Model(IRB), Economic Capital’s performance assessment and evaluation about Market Risk, Operational Risk and the total, the relevant risk assessment tools, the allocation and the related performance evaluation and assessment of Economic Capital. Meanwhile, the Economic Capital’s management mechanism is described in detail in the management project including the board of directors, the operators and related professional committees and functional departments and the branches.Finally, this paper summarizes briefly the research conclusions, innovation points, and existing limitations, then suggests the proposed content and the main direction may be involved in the integration of the system of the Economic Capital’s performance assessment and evaluation, and the effective implementation of the relevant governance framework about Economic Capital’s management of ZJY Commercial Bank in the future, combined with ZJY Commercial Bank’s three major risks.