Commercial bank management theory of asset-liability management is a commercial bank in order to realize the safety, liquidity and profitability of the "three" unity of the business management methods. The asset and liability management method of commercial banks is constantly developing along with the changes of the contradiction between the three, and has mainly experienced the evolution of asset management, liability management, and comprehensive management of assets and liabilities. (I) Asset management theory before the 1960s, commercial banks mainly emphasized the theory of asset management, which was adapted to the operating environment of banks at that time. At that time, the bank's source of funds is relatively single, mainly absorbing demand deposits, the initiative in the hands of customers, bank management can not play a decisive influence, while the initiative of the utilization of funds is in the hands of the bank, is the bank itself can control the variables. Therefore, the focus of bank management is placed on the asset side. Asset management theory has also gone through three different stages of development. Stage 1: Commercial Loan Theory, also known as the Real Bills Theory. This theory holds that the asset business of a commercial bank should concentrate on short-term self-liquidating loans, i.e., loans that are self-liquidating based on business practices. According to this theory, banks could not invest funds in risky and illiquid government bonds, corporate bonds and stocks. The theory of commercial loans for the first time identified some important principles of modern commercial bank operation and management, determined the basic guidelines for the use of funds for commercial banks, but also for commercial banks to reduce the operational risk provides a theoretical basis. The second stage: asset transfer theory. This theory believes that the best way to maintain the liquidity of bank assets is to purchase assets that can be readily realized in the market. The transfer theory provides a new method of maintaining liquidity for commercial bank operations and management. It removes the pressure on banks to maintain liquidity and allows them to expand their business and gain more revenue. But its biggest drawback is that the quick realization of securities depends largely on the market. If market demand is weak, liquidation is difficult and the bank's liquidity is not guaranteed. Stage 3: Expected Income Theory. The expected income theory arose after the Second World War and was put forward by the American economist Pruchnow in 1949 in The Theory of Time Deposits and Bank Liquidity. This theory argues that bank loans are not automatically liquidated, and that the liquidity of commercial banks depends fundamentally on the scheduled debt service of loans, while the repayment ability of borrowers depends on the expected income of borrowers in the future. If the borrower's expected income is not guaranteed, the bank faces greater risk even for short-term loans. The above three theories of asset management reflect the characteristics of business management of commercial banks at different stages of development. The various theories of asset management are not mutually exclusive, but complementary relationship, reflecting an evolutionary process of continuous improvement and development.
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Commercial Banks Management Theory
Commercial banks management theory
Asset liability management is a way for commercial banks to realize the "triple" of safety, liquidity and profitability. "Three" unity and management methods. The asset-liability management method of commercial banks is constantly developing with the changes in the way of contradiction between the three, and has mainly experienced the evolution of asset management, liability management, and comprehensive asset-liability management.
(I) Asset Management Theory
Before the 1960s, commercial banks mainly emphasized on the theory of asset management, which was adapted to the operating environment of banks at that time. At that time, the bank's source of funds is relatively single, mainly to absorb demand deposits, the initiative in the hands of customers, bank management can not play a decisive influence, while the initiative of the use of funds is in the hands of the bank, is the bank itself can control the variables. Therefore, the focus of bank management is placed on the asset side. The theory of asset management has also gone through three different stages of development.