Research On Reasons Of Money Shortage And Countermeasures In China

For a long time, China's commercial banks generally ignore liquidity risk under the state credit guarantees. In 2008, China recovered from the economic crisis relying on investment-led economic growth model with GDP maintaining rapid growth. Banks can obtain funds quickly from adequate market liquidity. In recent years, however, China's economic growth is slowing down and liquidity risk hidden before appears now. Money Shortage in June, 2013 fully exposed deficiencies of China's commercial banks in liquidity risk management.This paper analyses the reasons for Money Shortage and the corresponding countermeasures. This paper is divided into five parts. The first part introduces the research background,research status,research thinking and research methodologies. The second part is a brief introduction of Money Shortage and liquidity risk of commercial banks. The third part analyses the reasons for Money Shortage in two aspects including external factors impact and internal liquidity risk management. The forth part provides the VAR model based on samples to testify the relation between internal liquidity risk management together with external factors impact and Shanghai Interbank Offered Rate fluctuation. Based on theoretical and empirical analysis, this paper proves that external factors do cause some contraction pressure on the commercial banks' liquidity. But the primary reason is the mismatched asset-liability of commercial banks and the excessive and irregular use of Off-balance-sheet activities. In addition, Central Bank's behavior adds banking panic and Money Shortage impact. The last part is a comprehensive evaluation on Money Shortage and corresponding countermeasures to solve the problem.