Liquidity Risk Analysis Under The View Of Commercial Banks' Liquidity Creation

As the core of modern economy, finance plays a crucial role for the whole of the economy system's stability and development. Commercial Banks as the main financial intermediary, provide liquidity and proved the development of social economy Just as practice proved, the liquidity risk is the most direct cause of the commercial bank failures.How to control the liquidity risk efficiently is the problem needed to be solved within financial field. From previous researches there are many factors that have impact on the liquidity risk, such as the structure of the commercial bank balance sheet, interest rates, monetary policy, the degree of the financial market and so on. With two period model, from the view of the mismatch of the period of asset and liquidity and vulnerabilities of finance this paper studies the commercial bank creation.And we found that the mismatch of the period of the asset and liquidity and the current deposit concentration withdrawals are the main cause of the liquidity risk. As the tradion between banks, herding effect and the development of the capital market, the liquidity risk extended from a single bank to the whole banking system..The paper quotes measures of the liquidity creation, and made regression analysis by liquidity risk measure, liquidity creation, bad loans and the net asset yield rate. It is concluded that the liquidity risk of commercial banks is significantly relevant with these factors and the liquidity creation is the first reason of the liquidity risk of commercial bank. Along with the bad loans rate and the profitability increasing, the commercial banks'liquidity risk grows. With abundant capital, state-owned commercial banks have strong ability to resist risk but 1lack of commercial banks'liquidity creation, which have less relative liquidity risk.With flexible system and well financial innovation and services, national share-holding commercial bank, less capital opposite, face with bigger liquidity risk. To porper control of liquidity risk in power range, we should control the degree of liquidity creation, confirm corresponding critical point and guarantee the stable operation of commercial banks.From the empirical analysis result, we give suggestions to the control commercial banks' liquidity risk from the view of macroscopic and microscopic. This paper suggests that state-owned bank should put emphsasis on liquidity risk at the same time, we should strengthen the liquidity creation and increase the profit opportunities. Joint stock commercial banks should test corresponding risk in the product design and set the corresponding critical point, chasing profits at the same time pay attention to expand capital. Each Banks should reasonably match the structure of quality and maturity of the assets and liabilities, strengthen financial innovation risk test, prudently lend, vigorously develop intermediary business and improve the control of the commercial banks' liquidity risk.