Research On Liquidity Risk Management Of Finance Company

As a financial service sector of enterprise group,finance company,who plays a significant role of internal bank,is responsible for the safety and efficiency of cash in group.Meanwhile,finance company makes great contribution to the integration of industrial finance.Under rapid development,the quantity of institution,capital amount and total profit of finance companies experience an obvious increase.However,finance companies have been facing severe challenge due to China's economic transformation and the change in financial market both onshore and offshore.In this case,risk management becomes crucial.Among all kinds of risks,liquidity risk,which is the final performance of other risks,is fatal for the operation of finance companies.Hence,it is of importance to do research on liquidity risk of finance companies.This thesis combines theoretical analysis and empirical method.Firstly,the paper begins with basic theory of liquidity risk,including definition,causes and expression forms.Secondly,based on analyzing the operation and liquidity conditions of finance companies,it shows the current situation of liquidity risk in finance companies.Thirdly,by establishing a stress testing model of liquidity risk,the research tries to estimate liquidity risk in different extreme conditions.Fourthly,by a case study,the paper proposes specific suggestion for individual finance company.Finally,this paper concludes the deficiencies and difficulty in liquidity risk management of finance companies,and puts forward recommendations,including coordinating the relationship between enterprise group and finance company,strengthening centralization of funds,diversifying financing channel,constructing liquidity risk management IT system and improving risk management system.