Methodology

For calculating the efficiency and quality of liquidity management it would be used analysis of banks financial documents and the methodology of Russian central bank of evaluating the quality of liquidity risk management based on the methodology of Basel Committee on Banking Supervision.

Liquidity analysis coefficients that would be used in this study:

The liquidity ratio = liquid assets / total assets

Cash ratio = cash / total assets

Short-term funding ratio = liabilities maturing within one year / total liabilities

Capital adequacy ratio = capital / risk weighted assets

Loan / deposit ratio = loans / deposits

Loan / liabilities ratio = loans / liabilities

Method of analysis is the regression analysis.

The function for this study is given as:

Y = b₀ + b₁X₁ + b₂X₂ + b₃X₃ + e

Where: Y = Profitability representing the dependent variable;

b_0, b_1, b_2, b₃ are regression parameters;

X_{1 ,} X_{2 ,} X₃ are independent variables;

X₁ – bank cash assets;

X₂ – bank loans assets;

X₃ – bank securities assets.

In order to offer ways of increasing efficiency of a bank liquidity management and the structure of bank assets it would be used the research of Sksonova and Solojova (2012) and a model of managing short-term (up to one month) and long-term (one-year) liquidity created by Martinavičius, Jasevičienė and Krivkienė (2012).

Conclusions

The stability of commercial bank system depends on how successfully commercial bank managed profitability and liquidity parameters as well as implemented asset management strategy. The liquidity management methods are based on managing the bank's assets and liabilities at a certain moment in time. On the one hand lack of liquid assets can lead to inability of the bank do its payments, on the other hand, excess of liquid assets shows that lose its profitability. In order to find out the efficiency of liquidity management in federal, regional and local banks, I will choose one federal, one regional and one local bank using stratified and simple random sampling. After that, it’s needed to evaluate the necessity of bank liquidity. Roman and Sargu (2014) offer to use financial indicators for the capital adequacy, assets quality, management quality and profitability, especially the capital adequacy ratio and the ratio of impaired loans. Jasienė, Martinavičius, Jasevičienė and Krivkienė (2012) suggest that liquidity demands can be identified using methods of deposit structure and cash flow reporting. The main method of evaluating efficiency of liquidity risk management is using liquidity ratios (current and quick liquidity ratios), comparing duration of bank’s assets and liabilities according to their maturity. After that the realationship between the structure of bank assets and bank profitability is analyzed with help of regression analysis. Then, ways of increasing the effectiveness of liquidity risk management should be offered. Sksonova and Solojova (2012) propose that bank assets must be distinguished on three types of transformation before making management strategy up: quantitative, qualitative and time. It should be mentioned that management of liquidity in short-term differ from long-term liquidity management. According to this fact Martinavičius, Jasevičienė and Krivkienė (2012) offer a model of managing both managing short-term (up to one month) and long-term (one-year) liquidity.