Research On The Management Of The Liquidity Risk Of Commercial Banks Of Mongolia

The liquidity risk of commercial banks is a comprehensive risk. Various risks of the commercial banks through monetary markets or capital markets eventually may lead to the occurrence of the liquidity risk. The liquidity risk can easily lead to the instability of the banking system, and even can generate the economic crises for a nation. As a new tool to manage the liquidity risk, the stress testing helps the commercial banks predict their ability to withstand risks under the most unfavorable circumstances of the financial market, and can more effectively prevent the occurrence of the liquidity risk. As the main operation hub of the Mongolian modern financial industry and economic society, the commercial banks have affected the development of the Mongolian economic and financial industry. The liquidity problems have affected the stability of the financial system. The Mongolian commercial banks have not paid enough attention to the liquidity risk and its management. Therefore, it is significant for Mongolia to study the liquidity risk and its management by the Mongolian commercial banks.Firstly, this paper introduces the basic theories of the commercial bank’s liquidity risk and its management, such as the concept and measurement of the commercial bank’s liquidity risk, the causes of the commercial banks’ liquidity risk, the measuring index of the commercial banks’ liquidity risk, the importance of the stress test on the liquidity risk and main methods of the liquidity stress test of the commercial banks such as sensitivity analysis and scenario analysis, and the management strategy of the liquidity risk. Secondly,this paper analyzes the current situations of the Mongolian commercial banks’ liquidity risk and its management, and makes empirical test, clarifying the current status and causes of the Mongolian commercial banks liquidity risk by the following four ratios of the liquidity risk: the loan to deposit ratio, the reserve ratio, the non-performing loan ratio and the liquidity assets ratio,choosing the stress test model to make an empirical test of the Mongolian commercial banks liquidity risk, analyzing the current status and problems ofthe management of the Mongolian commercial banks liquidity risk, stating a potential liquidity risk of the Mongolian commercial banks through comprehensive index analysis, liquidity assets analysis and an analysis of liabilities and owners equity, and pointing out some problems of the liquidity risk management of the Mongolian commercial banks. Lastly, this paper put forwards some suggestions for strengthening the liquidity risk management of the Mongolian commercial banks.