Research On The Liquidity Trade-off Management Of Chinese Commercial Banks Under The New Credit Expansion Environment

Liquidity management is the core content of commercial bank management,which plays an important role in the steady operation of commercial banks.The global financial crisis in 2008 warned that the great changes in the economic and financial environment have brought new challenges to the liquidity management of commercial banks.Liquidity management has been paid more and more attention by the practical and academic circles.Since 2010,China's economic growth began to decline,the economic development goal changed from the pursuit of high-speed growth to the pursuit of high-quality development,supply-side reform has been advancing,the industrial development structure has been undergoing major adjustments,and the safety of commercial banks is threatened by large-scale exposure of non-performing assets.At the same time,the interest rate marketization,"financial disintermediation",and other environmental characteristics strengthened the degree of competition among commercial banks.The traditional interest rate spread is narrowed,profitability is threatened.In this new environment of intensified competition,the huge conflict between commercial banks' urgent needs of profitability and urgent needs of security is becoming more and more obvious,which made the assets and liabilities allocation into a "dilemma".At the same time,in recent years,the characteristics of credit expansion in China are still very obvious.Liquidity management optimization is becoming a focus when credit expansion is accompanied by the decline of China's economic growth and the deepening of supply-side reform of the macro environment.How to solve the dilemma between profitability and security through proper liquidity management has become the key to Chinese commercial banks to win in the fierce market competition.On the basis of understanding the root cause of the asset-liability allocation problem of commercial banks under the new environment for credit expansion,this paper introduced the trade-off theory into the study of liquidity management,discussed how commercial banks can use liquidity adjustment to realize the rebalance between the "three characteristics" under the condition of improving profitability and security,so as to improve market competitiveness.Three questions were mainly answered: first,what are the trade-off characteristics of commercial bank liquidity management? Second,what are the trigger conditions for commercial banks' liquidity trade-off management? Third,how can commercial banks use liquidity balance management,through adjusting the structure of assets and liabilities,to achieve the balanced “Three Characters”? Based on these problems,the characteristics of credit expansion and the new environment for credit expansion of commercial banks in China were analyzed,which provided a theoretical basis for the empirical study of liquidity trade-off management of commercial banks.Secondly,a theoretical analysis was made to analyze the trade-off process between security and profitability of commercial bank liquidity management.Partial adjustment model was used to investigate the trade-off characteristics of liquidity management of commercial banks in China.Thirdly,trigger conditions of commercial banks' liquidity trade-off management under the new environment of credit expansion were empirically tested.With the loan growth data and non-performing assets data of commercial banks in China,two sets of dynamic panel regression models were established to analyze the effect loan growth and non-performing assets had on commercial banks' liquidity.Fourthly,the liquidity adjustment measures and adjustment degree were discussed,the internal mechanism of liquidity trade-off management was depicted.Finally,the trade-off characteristics,trigger conditions,adjustment mechanism and adjustment degree of liquidity trade-off management of commercial banks in China were summarized and discussed,main conclusions of this paper were advanced,and some suggestions were put forward for commercial banks and regulators to improve related policies.Compared with the existing research,the main contributions and innovations are as follows: firstly,the existing liquidity management related research did not take into account the new environmental characteristics of credit expansion in China,which will aggravate the conflict between profitability and security of commercial banks.By focusing on the current severe market environment faced by commercial banks in China,the dilemma in asset-liability allocation of commercial banks was analyzed,and the important relationship between security objectives,profitability objectives and liquidity balance management was explored.Secondly,there has been few studies discussed commercial bank liquidity management with trade-off theory.By introducing the trade-off theory into the study of commercial bank liquidity management,the trade-off characteristics of China's commercial bank liquidity management both from static and dynamic trade-offs were discussed.Thirdly,the existing liquidity management behavior related research mainly discussed the liquidity adjustment without considering the target liquidity level.On the basis of verifying the existence of the target liquidity level of commercial banks,this paper analyzed commercial banks' liquidity adjustment under a certain target liquidity level,which was more in line with the reality of commercial banks' liquidity management,and enriched the existing researches.