An Analysis Of The Causes Of The Excess Liquidity In Commercial Banks

The excess liquidity has become a crucial feature of the Chinese economy, even the world economy. Since 2005, this issue has been becoming very prominent. As for a country implementing dividing-industry system and with financing being the major business of its commercial banks, the excess liquidity is harmful to the Chinese commercial banks and the Chinese economy itself. While weakening the profit-making ability, excess liquidity also has impacts on the financial resources allocation and the monetary policy conduction of the nation. The analyzing and finding the cause of this issue and putting forward constructive measures are of great importance to the healthy development of the Chinese banking industry and the economy. This thesis gives a systemic introduction to the definition and indication of the excess liquidity, and then presents a thorough analysis of the causes and impacts of excess liquidity on the commercial bank's operation. In the end, a few measures and reforming plan will be put forward pointedly to help commercial banks tackling the excess liquidity.