Research On Liquidity Risk Management Of Z Bank

As macro-economy and financial market develops,the enterprises’financing environment has been of great changes,and their financing methods are gradually diversified as well.Nowadays,Chinese commercial banks are confronted with the situation that high-qualified credit customers are of rapid loss.Large group companies choose various channels at home and abroad to finance,with large enterprises choosing the capital market and the debt market,medium-sized enterprises choosing the private financing.In this development situation,the financing channels of high-qualified enterprises have been gradually diversified and their dependence on bank credit funds has reduced,which has an adverse effect on the growth of banks’ interest income.Small loan companies and all kinds of payment institutions have been involved in the credit sectors,which has great impact on the traditional credit business of Chinese banks.Interest rate marketization has resulted in the change of the pricing mechanism of interest rate and makes it gradually become a price signal to reflect the running state of the macro economy.Recent years have witnessed the several cutting interest rates of The People’s Bank of China.Therefore,it can be concluded that the further development of interest rate liberalization and the more uncertain of the change of the interest rate has made great contribution to the situation that commercial banks are confronted with more tests in the interest rate spread management.Standing on the asset side,financial institutions compete with each other because of the shortage of high-qualified projects.These most popular measures are taken to give preferential pricing,which has negative effect on the growth of interest income.Standing on the debt side,vitality has brought in the financial market with the development of science and technology,and various innovative products have emerged one after another.Household deposits have been diverted by multiple channels,and banks are forced to collect deposits by raising interest rates,resulting in a continuous rise in interest payment costs.Diversification of financing means intensifies the phenomenon of "disintermediation" of funds,squeezing the sources of bank liabilities and limiting the growth of liabilities.Impacted by factors such as financing diversification and interest rate liberalization,the pricing level of commercial banks has declined,with the cost of liabilities increasing,the stability of deposits declining,and the interest spread gradually declining,which presents a huge challenge in front of the commercial banks in the aspect of liquidity risk management,especially for these small and medium-sized banks.This paper aims to study on the situation of its liquidity risk management with choosing Z Bank,a typical representative of urban commercial banks as the research object.On the base of analyzing the term structure of assets and liabilities of Z Bank,five listed city banks with the same asset size are selected as comparison,and quantitative indicators are compared to obtain the situation of liquidity risk management of Z Bank.Based on the analysis,it can have a conclusion that there are some problems in the liquidity risk management of Z bank,such as unsound liquidity management system,hidden risks in asset quality,maturity structure mismatch of assets and liabilities,and capital replenishment pressure.Then,the factors that have the greatest contribution are analyzed.The last but not the least,according to the market by operating environment and Z Bank’s own operating conditions,the paper puts forward some countermeasures on problems of Z Bank’s liquidity risk management.To start with,the paper establishes the liquidity risk management mechanism aiming to improve the management level.Furthermore,it is to keep the risk of bottom line and improve asset quality.Thirdly,the overall planning is taken to optimize the business structure of assets and liabilities;The last is to develop capital planning,strengthen capital supplement.