The Study Of The Application Of Dynamic Financial Analysis In Commercial Bank’s Asset Liability Management

2013, The Third Plenary Session of the eighteenth was held, and the reform of the financial market system was been proposed and discussed. It will make the marketization of finance deeper. And more, the financial market have to face higher risk and stronger challenge. The monitoring and management of commercial bank,which is the main part in financial market, has attracted widespread attention, especially its assets and liabilities management and its related risk monitoring.Asset and Liability Management in China was stared in1980s. After more than ten years development and perfection, it has become a very important tool for central bank’s macro regulation and commercial bank’s own management. But as ALM in China started late and face complex economical environment, it is still in constant exploration. This paper attempts to use the latest financial analysis method into the asset and liability management of commercial bank. It analyzes the practicability of ALM theoretically. And then, through the analysis of the case of Shanghai Pudong development bank, it explain how the dynamic financial analysis can be used in the asset and liability of commercial bank in China.Dynamic Financial Analysis, as a whole financial modeling method, can show how.the operating results to be influenced by the environment and internal decision by simulating the future survival environment and operating results. It differents from the traditional financial analysis methods, cause its comprehensive, stochastic and dynamic. Once it is used effectively, it will bring a major reform in our enterprise financial analysis and our financial analysis ability will hugely enhance.This article firstly introduces the main theories of commercial bank asset and liability management. From the asset and liability theories, we can find the basis to build asset and liability model. Depend on that, we establish the ALM model which relates to the DFA. Secondly, based on the process of dynamic financial analysis, we collect and organize the relevant data of Shanghai Pudong development Bank, simplify the model reasonable, simulate the data by monte carlo method, establish a model can be used in the scenario analysis. Finally, it simulates the future economic scenarios of Shanghai Pudong Develop Bank. Through that, this article shows how the dynamic financial analysis is used in the commercial bank asset and liability management.The article’s main contribution is preliminarily exploring the use of dynamic financial analysis in commercial bank asset and liability management. However, there are many shortages in this article. Firstly, since the model is simplified, there may exist distortion in the process of simulation. Secondly, as its unable to find a enough powerful software to stochastically simulate the commercial bank’s future condition, the article can only use scenario analysis method to briefly analyze the commercial bank’s condition may happen in the future. So it’s hard to show DFA’s actual and powerful prediction and analysis function, and it can not achieve its real effect.For the above shortcomings, the author will take more exploration in the future. And hope the later researchers can break through those problems.