How do traditional banks work?

The development of commercial bank management theory has gone through three stages: asset management theory, liability management theory and comprehensive asset-liability management theory.

Asset management theory is the earliest bank management theory, and its development is divided into three viewpoints, namely, commercial loan theory, transfer theory and expected income theory.

Debt management theory is a kind of bank management theory produced in financial innovation, which holds that banks can enhance their liquidity through active debt.

The theory of comprehensive asset-liability management considers the asset-liability structure of banks, emphasizes the coordination of scale and term between assets and liabilities, and maximizes profits under the condition of interest rate fluctuation.

Countries have established a series of models based on the practice of comprehensive asset-liability management theory, including linear programming model, financial planning model, interest rate sensitivity gap management model and long-term gap management model.