A Case Study On Identification Of Liquidity Risk Influencing Factors Of Bank Of Ningbo

The Chinese economy has seen a dramatic rise in the importance of urban commercial banks,as they have grown in size and become indispensable.This is due to their capacity to provide service to small and medium-sized businesses and the local market.However,along with the risk thunderstorm events of Baoshang Bank and Jinzhou Bank,the liquidity risk control and management of urban commercial banks has gradually entered people’s vision.Not long ago,due to problems in liquidity risk management,Silicon Valley banks in the United States were also unable to escape bankruptcy.On the one hand,Silicon Valley banks do not properly control asset side risks.Silicon Valley banks have purchased too many long-term fixed income bonds,exposing the asset side to interest rate risk.On the other hand,due to the Federal Reserve’s interest rate hikes and liquidity tightening,deposits on the debt side have experienced a decline,and the maturity mismatch problem has gradually worsened.Silicon Valley banks have had to choose to sell assets and raise funds,ultimately leading to a credit crisis and bankruptcy.Silicon Valley Bank,as the 16th largest bank in the United States,is difficult to avoid suffering from a liquidity crisis due to mismatches in terms of deposits and loans and the impact of macroeconomic monetary policies,and ultimately has also moved towards a run and bankruptcy.Liquidity risk is not only a comprehensive risk,but also a key factor affecting the healthy and stable operation of commercial banks.City commercial banks not only need to passively meet the liquidity risk indicator requirements proposed by regulators,but also need to actively identify the factors that affect liquidity risk to prevent and resolve liquidity crisis.This paper comprehensively identifies the liquidity risk factors that affect urban commercial banks and Bank of Ningbo by using literature research,theoretical research,industry research,case study and other methods,and comprehensively evaluates the liquidity risk performance of Bank of Ningbo in recent three years by using factor analysis.This paper,employing the literature research method,amalgamates the domestic and foreign literature on the determinants of liquidity risk for commercial banks,as well as those of urban commercial banks in China.A thorough assessment of liquidity risk is presented,with remarks to guide and construct the ensuing analysis.In the theoretical research method,this paper expounds the concepts of liquidity and liquidity risk,makes a comprehensive analysis of the internal and external factors affecting liquidity risk,and collates the measurement indicators of liquidity risk in the regulatory system,which provides a theoretical basis and support for the following analysis.In the industry research method,this paper identifies the liquidity risk characteristics of urban commercial banks by analyzing the liquidity risk factors that affect them,and provides a direction for evaluating the liquidity risk of Bank of Ningbo.In the case study method,this paper finds out the macro factors affecting the liquidity risk of Bank of Ningbo through qualitative analysis,including geographical factors,management factors,strategic factors,loan industry distribution factors,etc.Starting from the internal factors,this paper quantitatively analyzes and evaluates the indicators of liquidity risk in the asset end,liability end,profit end and capital end of Bank of Ningbo.After that,this paper classifies all evaluation indicators into asset performance,liability performance,profitability and financial soundness,and uses factor analysis method to build a comprehensive evaluation system for the quarterly performance of the liquidity risk of Bank of Ningbo in the past three years,and analyzes the trend and reason of fluctuations.This paper culminates in a synopsis of the elements that influence the liquidity hazard of both the City Commercial Bank and the Bank of Ningbo,as well as offering some proposals.The liquidity risk of China’s commercial banks is largely determined by both internal and external influences,as this paper has discovered.Urban commercial banks,with their varying resource endowments and local government interference,typically possess the traits of a concentrated loan-granting industry and a substandard credit rating.At the same time,due to the small asset scale of urban commercial banks,their ability to absorb deposits is not as good as that of large state-owned banks and rural commercial banks,and their businesses and products are relatively simple,they also rely on interbank liabilities,and their profitability is lacking.In addition,most urban commercial banks have not established a sound risk management system and risk monitoring mechanism,and the preparation funds for risks are also insufficient,so the ability to resist risks is relatively low.As one of the first listed urban commercial banks and the latest systemically important bank in China,Bank of Ningbo has greater advantages in liquidity performance compared with other urban commercial banks.Through research,it is found that the good liquidity performance of Bank of Ningbo is mainly due to its superior geographical location and customer resources,perfect risk management system and strong profitability formed by multiple profit centers.At the same time,this paper also finds that Bank of Ningbo excessively relies on active liabilities in its debt structure,the industry of debt investment is relatively concentrated,and excessively relies on intermediary business in its profit structure,which may lead to problems such as imbalance of asset liability structure and serious liquidity mismatch,which need to be paid attention to and improved in the future.Few have explored the liquidity risk of urban commercial banks,a topic that this paper has revolutionized.At the same time,using a variety of methods,through literature research and industry research,we have identified the factors that mainly affect the liquidity risk of Bank of Ningbo,extending from the macro situation of the industry to the micro situation of Bank of Ningbo,extracting indicators in an all-round way and building a comprehensive evaluation system for the liquidity risk of Bank of Ningbo.It overcomes the defect of evaluating the liquidity risk of commercial banks through a single indicator,and provides a theoretical framework for studying the liquidity risk of urban commercial banks in China.Finally,this paper hopes that urban commercial banks and small and medium-sized banks can actively identify and control the factors that will affect liquidity,monitor,identify and respond to liquidity risks by relying on a sound risk management system and prudent risk attitude,and contribute to maintaining the stability of China’s financial system and better serving the real economy.