The Research Of Economic Capital Measurement And Application In Commerial Banks

Capital is a commercial bank's survival and development foundation, which determines the viability, risk resilience and competitiveness in the market. Because of the importance of capital in the position of commercial banks, the economic capital management, capital adequacy ratio and return on capital requirements of banks has become the core content of management in Advanced international banks. In 2006, China Banking Regulatory Commission released the schedule of Domestic commercial banks to implement Basel II, which required large commercial banks should gradually implement Basel II in 2010-2013. The implementation of Basel II will force domestic banks to improve the management level, and consider how to accurately measure and rational use the capital, as much as possible to maximize value in capital constraints. Therefore, both from external regulatory requirements, or from the bank's internal management needs, economic capital management is very important for the commercial banks to enhance the refinement of management and Comprehensive risk management.This paper focuses on economic capital measurement and application, study the case of domestic commercial banks, suggest improvements based on the problems encountered in the implementation process of economic capital management in current domestic commercial banks, provide a reference for the domestic commercial banks to further improving economic capital management system.This paper has six chapters. Chapter one is preface, it introduces the background of economic capital. Chapter two gives an overview of the basic theory of economic capital. Chapter three introduces the measurement principles and methods of economic capital research, concluded measurement methods of credit risk, market risk and operational risk. Chapter four is case study of economic capital measurement, it introduces example of economic capital measurement range, actual measurement methods and procedures in a domestic bank. Chapter five introduces the application of economic capital in domestic commercial banks, include the application in performance appraisal, loan pricing and customer evaluation. Chapter six is conclusions and recommendations, it concludes the study and make recommendations for improvement.