The Study On The Economic Capital Management Of Small-Medium Banks

The concept of economic capital appears in the "New Basel Capital Accord" for the first time in June 26,2004, then the international banks played more and more emphasis on this concept. In year 2005, China Banking Regulatory Commission began requiring commercial banks to focus on strengthening the economic capital management, capital levels and the risk level to achieve a reasonable match. Under the constraints in the economic capital, how to develop China's commercial banks should become the focus of attention of many banks. In addition, China has already formally joined the WTO, for banks to participate in global competition, it is must comply with an international practices, which is Basel II requirements, and make sure that it is will be the fair competition. Construction Bank introduced the concept of economic capital in 2002, and gradually established an economic capital budget management system, Bank of China, China Industrial and Commercial banks followed, have introduced their own economic capital management system, and begin to implement the system and to increase the value of the main indicators of economic comprehensive performance assessment.In this background, XX bank gradually began to accept and consider the economic capital management. This article is for the specific circumstances of XX bank, designed a set of the measurement of economic capital which is be suit for small and medium commercial banks, and to explore the economic capital management in asset pricing, business development, performance evaluation aspects of the application.First of all, introduces the theory use in this paper, then analyzes the significance of the amount and structure of bank capital for banks and long-term development, and shows the specific meaning of the economic capital, and the connotation of economic capital management, and makes the explanation and comments about this theory which is from domestic and foreign experts and scholars. Secondly, this paper studies the development of XX bank, and makes a simple introduction about the risk management process, and did some foreshadowing for the sequence design about XX bank's economic capital measurement and asset pricing, business development, performance management. Third, the article conducted in-depth research on the measurement of economic capital of XX bank, after the analysis of the measurement methods of credit risk, market risk, operational risk and overall economic capital, for the corresponding giving the measurement methods for XX Bank economic capital, then made calculation for the credit risk economic capital, operational risk economic capital combined with financial statements of banks. Fourth, the article for the XX bank will apply economic capital asset pricing, business development and performance assessment and other aspects were discussed and put forward some suggestions. Finally, the article summarized problems and solutions on the perspective of the economic capital management's improving about these small and medium commercial banks.