Research On Liquidity Risk Management Of CMB

Liquidity is one of the basic principles in the management of commercial banks,it is also the vitals for development and management of commercial banks. Only if the liquidity of financial assets and liabilities in commercial banks are ensured,their financial security and ultimately profitability are possible. Therefore,liquidity risk management plays a decisive role in the operation and management of commercial banks.In2007,the U.S. sub-prime crisis and the following global financial crisis leaded to global financial institutions especially commercial banks move from excess liquidity to liquidity shortage quickly. A large number of financial institutions went bankruptcy because of the liquidity crisis. This crisis made the global financial institutions fully experience the tremendous power of liquidity risk. With the world economy struggling to recover in adjustment,the domestic economy’s downward pressure is increasing; overcapacity contradictions are obvious; the bank bad loans are growing,the business structure becomes more complicated and various; The online finance is developing,the market-based interest rate reform and financial disintermediation are accelerating. In the year of2013,Chinese market liquidity had met the challenge of money shortage.which was rarely seen in the past decade. June2013,the currency market liquidity was once highly stressful; market interest rates rose sharply; trading systems and clearing systems delayed closing time and some institutional trade default rumors spread in market. By now,China’s commercial banks have not appeared large liquidity crisis yet. But because of the young age of China’s commercial banks,the development immaturities of financial market as well as the unsound liquidity risk management system,the liquidity risk still exist. Therefore,we need to combine domestic and foreign advanced liquidity risk management theories with the current situation of China’s commercial banks to improve the level of liquidity risk management. This thesis is divided into four parts,it takes China Merchants Bank as the object and mainly focuses on issues related to the bank’s liquidity risk management. The first part is the introduction of the liquidity risk management. And then the evolution of management theories and literature review come after. They are all the theoretical foundations for the following empirical analysis. The third part introduces the basic information of China Merchants Bank,and then from the perspective of the static indicators of liquidity risk measurement,the author analyzes the current situation of China Merchants Bank liquidity according to the loan-to-deposit ratio, the liquidity ratio,the non-performing loan ratio and the provision coverage ratio in the fourth part. The main conclusion as follows:China Merchants Bank liquidity remains in the high level and its liquidity risk management capabilities improve effectively in a short period. But because of the great influence of the external economic environment and currency policies and the increasing ratio,such as the loan-to-deposit ratio and the non-performing loan ratio,there are potential liquidity risks existing in China Merchants Bank. Alternatively,the liquidity risk management situation is still severe in the long run, combining with business development data in recent years to analyze the main liquidity risk management problems which exist in China Merchants Bank:the single asset structure expands the risk of capital recycling,the single liability structure extends the payment risk,the mismatching savings and loan duration resulting in the prominent potential liquidity risks. In the final part,the author gives some specific suggestions in accordance to the theories and the empirical results including learn from the advanced foreign risk management experience(implement a comprehensive risk management,compliance with internationally harmonized regulatory standards,solve problems through international cooperationimproving), perfecting the asset-liability structure,improving credit asset quality and promoting financial innovation.