Commercial Bank’s Liquidity Management And It’s Impact On The Performance

Liquidity management has always been one of the important and difficult problem in the research field of the commercial Banks.After the 2008 financial crisis,countries focus more on commercial Banks’liquidity management.Liquidity management is an important part that the commercial Banks must face.Commercial bank performance management is an important assurance for the normal profit,looking for the combination of the good performance and liquidity is very essential.Now,based on the commercial bank liquidity management and the performance impact to liquidity’s research is still relatively lack,so we can’t through precise management of liquidity to the expected the positive and negative influences to the commercial Banks.In the first part,this paper selects 67 commercial banks’ annual data from 2008 to 2015,and then we establish liquidity management of partial adjustment model,in order to verify whether commercial bank actively management their liquidity.We use loans-to-deposit(LTD)and net stable funding ratio(NSFR)two major indicators to explore whether commercial Banks set up liquidity goal,and import the adjusting speed as an another indicator to explore commercial banks’ liquidity manager.The empirical results show that,no matter the LTD or NSFR regulatory indicators,commercial Banks can also set liquidity target according to their own characteristics.When the actual value deviation from the target,the adjust speed is always positive(that means,commercial banks have the impulse adjust their real result to the client-centered goal),it shows commercial Banks actively manager their liquidity management.When the commercial banks have to obey loans-to-deposit’s regulation,we can also find that commercial Banks focus more on the LTA indicators.In the second part,we use adjust speed as proxy variable of liquidity management,construct a panel data model through selecting data from 2010 to 2015 years.In the further study,we explore the impact of liquidity management of commercial banks to the performance,from the analysis of the full sample and different ownership bank analysis of the two part to explore the relation between commercial banks’ liquidity and performance.The results show that the relation between commercial banks’ liquidity management and performance is inverted u-shaped,it means,to some extent,increasing liquidity can increase profit,when liquidity exceed the optimal liquidity,they will change on the opposite direction.In addition,the empirical results show that the commercial banks liquidity management towards the best performance target under the risk management and control.