An Empirical Study on the Determination of the Structure of Intermediate Business in Commercial Banks

Risks of intermediate business of commercial banks are relatively low compared with those of asset-liability business. However, market risks of intermediate business have been growing with innovation and development of products of credit business. Therefore, to prevent market risks becomes a significant task for intermediate business of commercial banks. The application of VaR method in the paper enables to standardize and quantize market risks of the intermediate business. The market risks could be presented as simple figures which are convenient for banks and financial departments to compare their risk circumstances. Moreover, it helps provide visual information of portfolio risks for decision-making administrations to take effective risk-prevention measures.