Liquidity Risk Management Of HS Bank Based On Incomplete Contracting Theory

Risk management is the eternal theme of commercial bank business operations.Liquidity risk,interest rate risk,operational risk and credit risk together constitute the four major risks of commercial banks.Liquidity risk is huge,not only for commercial banks is a fatal risk,but also because of the risk of transmission mechanism,the entire financial system and even the national economy will cause great damage.June 20,2013,the Shanghai banking industry overnight repurchase interest rates soared to an unprecedented 30%,seven-day repo rate was also up to 28%,while the two interest rates in recent years has been less than 3%.The fundamental reason for the sharp fluctuations in interest rates is the lack of market liquidity.For a long time,because of the state to do credit endorsement,China's commercial banks failed to give sufficient attention to liquidity risk.In addition,with the further liberalization of financial markets and the increasingly complex external financial market environment,commercial banks have begun to expose more and more problems,such as the single structure of assets and liabilities,the period mismatch serious,these problems will undoubtedly increase the difficulty of liquidity risk management.The incomplete contract theory,as one of the modern economic standard analysis tools,has been widely used in the fields of enterprise governance and property right structure.On October 10,2016,the Swedish Royal Academy of Sciences announced that Oliver Hart and Bent Holmstrom shared the 2016 Nobel Prize in Economics in recognition of their contribution to the study of incomplete contract theory.The great explanatory power of the complete contract once again aroused people's attention.This paper takes this opportunity to study the problem of liquidity risk management of commercial banks from the perspective of incomplete contract theory.In the content of liquidity risk management as the main line,combined with incomplete contract theory analysis of liquidity risk management contract incomplete.Then,the paper explores the liquidity risk management problem of HS Bank,analyzes the present situation of liquidity risk management of HS Bank,and finally puts forward the corresponding improvement suggestions according to the incomplete contract theory.This paper is divided into five components.The first part is the introduction,the paper introduces the research background and meaning,the structure frame and the innovation point.Part II of the theoretical review section.Firstly,the related concepts,causes and classification of liquidity risk are explained,and the main theories of liquidity risk management are expounded.Secondly,the related concepts,causes and related theories of incomplete contract are introduced.Finally,the paper discusses the attributes of liquidity risk contract and points out the reasons,consequences and governance principles of liquidity risk management contract.In the third part,taking HS Bank as an example,this paper points out the problems existing in HS liquidity risk management by analyzing the main liquidity measure of HS Bank and combining with the current situation of HS bank liquidity risk management.The fourth part,combined with the incomplete contract theory,puts forward the corresponding improvement suggestions from the angle of formal contract,relationship contract and psychological contract.The fifth part is the conclusion and the prospect part,summarizes the research of this article,points out the insufficiency of this article,and provides the thought for the further study.