The Research On Economic Capital Management Used In Commercial Banks

After the global financial crisis in2009, the national banking supervisory authorities to re-examine the problem of capital constraints, increasingly stringent regulatory capital at the same time raise the exogenous capital cost and the difficulty is also growing, capital will undoubtedly become the face of the future development of the commercial banks in projecting one of the constraint conditions. Commercial banks need to focus on the internal tap potential, improve capital efficiency and return on capital, to achieve the balance between risk, capital and income. As the bank actually assume a true reflection of the level of risk economic capital, is a powerful tool for achieving this goal. Economic capital management in commercial banks in China due to a late start, the uneven level, is facing a lot of pressure and challenges in the increasingly fierce market competition environment.In this paper, the theory and practice combined with in-depth analysis of the important value of the economic capital management in the management functions, and generally for the mainly manifested in the following aspects:risk management, economic capital in the portfolio analysis, quota management and banking products pricing and other business areas to be applied, and to realizing the scientific, systematic, and the refinement of the overall risk management of commercial banks; allocation of resources in the development of pragmatic, rigorous economic capital allocation program based on the development of the commercial banks can determine future periods policies and funds to invest to ensure optimal allocation and efficient use of resources of all kinds; aspects of performance appraisal, commercial banks by the economic capital management, the establishment of economic value added and risk-adjusted return on capital as the core of the performance appraisal system to build scale quality, the risks and benefits of taking into account the incentive and restraint mechanisms.In this paper, a brief introduction of the international advanced banks economic capital management applications, to conduct a comprehensive analysis of the economic capital management status of China’s commercial banks and the problems to fully tap the significance of domestic commercial banks in the implementation of economic capital management, the role and difficult, and in the implementation of all aspects of the business plan, resource allocation and performance assessment, risk limits applications to come up with strategies and recommendations to better use of economic capital management to help promote the domestic banking sector.