Asset-liability Management Of M Bank Based On The Marketization Reform Of Interest Rates

The fact that the People’s Bank of China restarted the marketization reform ofinterest rates puts forward severe challenges to the asset-liability management ofcommercial banks. On the one hand, interest rate risk of commercial banks risessharply. On the other hand, commercial banks are inexperienced in the interest raterisk management and asset-liability management, which poses a severe test on theinterest-rate spread dominated profit model. Therefore, through the study on thetheories and practice of the marketization reform of interest rates as well as theasset-liability management of commercial banks both at home and abroad, the paperanalyzes the current situation and major problems of the asset-liability managementof commercial banks in China. By adopting case studies, historical analysis,comparative analysis, interest rate sensitivity gap analysis, the writer puts forwardsome effective strageties to help commercial banks improve their interest rate riskmanagement and asset-liability management abilities so as to weather themarketization reform of interest rates.On the basis of the theoretical research on the interest rate marketization and theasset-liability management, the present study proposes major strategies to improveand perfect the asset and liability management of commercial banks in China throughthe analysis of the M Bank’s current situation of the asset and liability managementagainst the background of the interest rate marketization. Chapter One introduces thepaper’s significance, literature review, as well as the framework and the researchmethods. Chapter Two elaborates on the theories methods of the interest ratemarketization and asset-iability management, and elicits the definition and basicprinciple of the interest rate marketization and asset-liability management, on thebasis of which the writer analyses the influence of the interest rate marketization onthe commercial banks’ asset-liability management. Chapter Three presents the current situation and operation of the M Bank, exposing major problems of its asset-liabilitymanagement through the analysis of the amount and structure of its asset and liability.Meanwhile, the paper also explains how foreign commercial banks improve theirasset-liability management in great detail. Chapter Four puts forward major strategiesto meet the challenge of the interest rate marketization. The strategies are as follows:firstly, identify and emphasize the goals and basic principles of the asset-liabilitymanagement; secondly, improve the portfolio management of asset and liability;thirdly, strengthen the pricing management of asset-liability portfolio; forthly,accelerate and promote financial innovation.Chapter Five draws the following conclusions based on the above research andanalysis: firstly, although the performance and management of M Bank are relativelyhigh, it cannot meet the regulatory requirements and still lags behind compared withlarge listed banks and western mainstream commercial banks; secondly, opportunitiesand challenges coexist against the background of the interest rate marketization;thirdly, commercial banks need to effectively avoid interest rate risk by reasonablysetting interest rate risk exposure; fourthly, the enhancement of asset-liabilitymanagement is of much significance to improve commercial banks’ overallmanagement ability.