Research On The Liquidity Risk Of The Banking Of Beijing

Content: Since the full liberalization of China’s banking industry in2007, the Bank ofBeijing is facing more intense competition, it’s imperative to improve liquidity riskmanagement capability. This article is based on the past literature researching for themobility, and uses the static indicators as well as model analysis to study the liquidity riskstatus of the Bank of Beijing. The first part of this article reviewed literature about liquidityrisk both at home and abroad to study the causes of liquidity risk, the risk of influencingfactors and risk countermeasures. Subsequently this article introduced the development ofthe theory of liquidity risk management as well as the current liquidity measure, to preparefor the next analysis. The third part of the article studies the indicators to conclude theliquidity risk of the Bank of Beijing. Main conclusions: the liquidity risk control ability ofthe Bank of Beijing in recent years has been effectively improved, indicators performsbetter liquidity among the domestic banks, but the liquidity of the Bank of Beijing isvulnerable to external factors compared to larger banks. The fourth part is the empiricalpart of this article, and mainly analyze on the impact of the liquidity risk factors ineconometrics. The explanatory variable is loan-to-deposit ratio. The explaining variableshave the ratio of loan-to-total assets, cash and balances in central banks-to-total depositratio, core capital adequacy ratio and bank profit margins. Empirical conclusion: loan is themain source of liquidity risk, core capital adequacy ratio and the level of profitability ofthis bank affect the liquidity risk. Finally, this article proposes some correspondingimprovements of banks’ liquidity risk management recommendations based on theempirical results. Recommendations include: to learn from foreign experience in riskmanagement, and to improve internal risk management system, to adjust the structure ofassets and liabilities, to optimize credit risk management, to establish the risk monitoringand early warning mechanism.