The Study On Liquidity Risk Management Of Agricultural Bank Of China Based On The "Basel Ⅲ" Perspective

Liquidity risk of commercial banks as one of the most fatal bank risks is extremely contagious and destructive. It is also one of the "three" principle of bank management, which has important significance to commercial banks. Agricultural Bank of China, as the last large state-owned listed commercial banks, the liquidity risk of the system is of great importance to its liquidity risk management to conduct in-depth study of the importance of self-evident.The 2008 Financial Crisis has brought the global financial regulatory authorities to see the overall importance of liquidity risk again.In 2010, the Basel regulatory Committee put forward a set of capital and liquidity standards of global financial reform program-the "Basel Ⅲ" which based on the Basel Ⅱ basis. The agreement covers a range of contents, including the redefinition of the definition of capital, a substantial increase of common stock holdings, the bank system to monitor the level of leverage and expand the scope of capital framework risk coverage, etc.Liquidity is regarded as the lifeline of commercial banks. It not only directly determines the safety of commercial banks in individual survival, but also is vital to the stability of the whole country and even the global economy. At present, China’s economy enter into a new period in which the economic growth mode transforms, the economic growth is downward, most of the traditional industry overcapacity is exposed, the NPL ratio of commercial bank system is increasing rapidly, and the credit risk exposure increases the pressure on liquidity risk management of commercial banks. The NPL ratio of the Agricultural Bank of China reached 2.39% by the end of 2015, it become the first five state-owned commercial banks which non-performing loan ratio exceeded 2%, the NPL ratio is also significantly higher than the the same period the average level of 1.67% of commercial banks in China.At the same time, the liquidity risk management of Agricultural Bank of China still has many weak links, which is facing more challenges than other large commercial banks in the process of the implementation of Basel III. In the above context, it has a strong practical significance to take a depth study of the liquidity risk of Agricultural Bank of China, for the effective prevention of the Agricultural Bank of China to achieve liquidity risk and regulatory requirements of Basel III, liquidity risk management as well as other large commercial banks.This paper is based on the background of the development of Basel II, supported by the liquidity risk management theory, through comparative analysis and qualitative analysis and practice investigation of three methods to conduct the thorough research to liquidity risk management of the Agricultural Bank of China.By analyzing I, II, III contents of Basel, learned the progress of Basel agreement and the latest requirements in liquidity risk management, at the same time by comparing relevant liquidity risk index in Basel III with four regulatory tools issued by CBRC,points out that the differences in liquidity risk management of the international Basel and China’s four major regulatory tools.Then other risks will directly or indirectly lead to liquidity risk, recognizing the importance of managing the liquidity to the management of a bank. Through the analysis of a series of liquidity index, such as liquidity ratio, loan-deposit ratio, the distribution of loans, etc., clear that Agricultural Bank of China exists problems in terms of the liquidity management.The problems are mainly reflected in irrational distribution of assets and liabilities, obvious regional differences as well as liquidity crisis in the era of economic globalization which bring challenges to China’s banks. Some specific suggestions are put forward in the face of these problems. The increasing of NPL ratio of Agricultural Bank of China means that there are a lot of defects in its operation and management, now it is the era of economic liberalization, this phenomenon will be very contagious, China’s banking industry should pay attention to this phenomenon, to strengthen the construction of system and management, and work out some measures to reduce non-performing loan ratio of China’s banking industry, meanwhile,pay attention to market risk, credit risk and operational risk, push our banks to create a good external and internal environment. Only in this way can make the healthy and orderly development of China’s economy.