Chinese Commercial Banks Economic Capital Management Study

Capital is the foundation upon which commercial banks survive and develop. With the focus of the bank's management shifting to the all-around management of risk, and according to the idea of the 1988 Basel Capital Accord and the new Capital Accord, capital which is the ultimate target in risk management has been more and more concerned. Enhancing the risk management, measuring the bank's risks precisely, then assigning the bank's capital efficiently to cover the risk has become the focus of attention. That is to say, the bank should meet the requirement of the Basel Accord as well as expand the scale of the banking business, in order to maximize the value of the bank. Recently, Economic capital management philosophy developed quickly. With the continuous development of the banking capital management theory, the concept of economic capital has been drawing an increasing attention. The establishment and application of such concept has not only achieved the unification of the risk of loss and capital commitment in highly quantitative basis ,but also harmonized and continuously promote risk management and capital management with the overall unity and then the capital restriction establish its central status in bank risk management. Economic capital management study takes highly practical significance on state-owned commercial banks, in addition it will play an important role in realizing the optimal allocation of assets in commercial banks, preventing operational risks and establishing a scientific and rational performance appraisal system.My main idea is to give advice of constructing the economic capital management system, basing on the experience of western banks and the condition of our own banks.There are six chapters in this dissertation. The fist one begins with the practical and theoretical significance of this thesis. Then we introduce the relative research on this subject, and point out the construction of this dissertation. The second part introduces and analyzes the meaning, the principle and the frame of the economic capital management. The third part talks about the economic capital management practice in western commercial banks and the enlightenment to our country. Next the forth part analyses the real operation of the economic capital management in China and points out the problems at the same time. Then, the fifth and the sixth part put the emphasis on giving advice of constructing the economic capital management system of ourselves. And also give some advice on how to make the economic capital management system operating effectively.