Liquidity analysis and efficient management of bank liquidity

Modern liquidity management technologies contain two main approaches: a bank or an enterprise must have a stock of liquid assets, or be able to attract them quickly. This alternative is manifested in the allocation in it of liquidity-the "stock" (stationary liquidity) and liquidity-the "flow" (a dynamic value characterizing current liquidity). Analysis of liquidity allows us to conclude that these approaches, strategies and methods of liquidity management in practice are quite effective.

An analysis of the liquidity of an insurance company, bank or enterprise has as its goal to adequately assess the creditworthiness of the bank or the solvency of the enterprise and the ability to guarantee fulfillment of financial obligations to partners. In its most general form, it presents a comparison of funds that are classified and grouped in order of decreasing their degree of liquidity.

Liquidity analysis shows that all assets should be classified into four groups:

1. The most liquid - used for predominantly current calculations.

2. Quickly realized assets - payments, which will occur within 1 year, for example, accounts receivable.

3. Slowly implemented - payments, which will be made after 1 year.

4. Difficult to implement - used for a long period.

The first three can constantly change, and therefore more liquid.

In modern society, banks in terms of their functional significance, the banking system can be compared with the circulatory system of the body.

By attracting funds, banks take responsibility for respecting the interests of depositors. The latter are interested in the fact that the trusted bank's capital is not affected. Proceeding from this, banks should have all the opportunities, by a specific date, to fulfill their obligations without losing part of their income. This ability of the bank is characterized by a definition of bank liquidity.

Recent developments in global financial markets, liquidity analysis, confirmed the need to improve the banking segment in close relationship with the restructuring of the economy.

Since the very beginning of the crisis manifestations in the world economy, the Central Bank has not predicted strong negative consequences. It was assumed that only indirect effects would occur by raising the prices of financial resources when borrowing in foreign markets and reducing the resources of non-residents. But even this scenario, which was quite favorable in the eyes of the management of our central bank, had a significant increase in the risk of bank liquidity.

However, if the damage to the stability of the banking sector was not inflicted from outside, it arose from within the economic system. The condition and results of the banks' activities largely depend on the conditions in which they have to work. Severe crisis consequences in various sectors of the economy, tightly dependent on partnership with Europe, could not but affect the banking system. The volume of services sold decreased, there was a strong outflow of resources, sharply increased the share of problem loans, banks felt a lack of liquidity. It was then, and it was thanks to the support of the Central Bank that it was possible to minimize the negative consequences for commercial banks.

As a result, the banking system suffered from the crisis relatively, due to less dependence on foreign investment.

Analysis of the liquidity of a number of banks, the consequences of the global economic crisis and many other factors gives the problem of improving liquidity management a special significance.

Considering its theoretical basis, applied today in banking, it should initially be noted that the unit of economic activity of any enterprise is a transaction or, in the case of a bank, an operation. Based on this, the bank's liquidity can be defined as an indicator reflecting the change in the state of the bank in the course of conducting banking operations. Therefore, the liquidity management of the bank is nothing more than the organization of banking operations in such a way as to ensure the availability of the required amount of payment means at the required time.