The Management to Commercial Bank´s Reserve Based on Liquidity Risk

It is an important source for Commercial bank´s reserve to deal with liquidity risk. In the modern society with highly increasing liquidity risk, the management to commercial bank´s reserve is particularly important. Based on the analysis of Monti-Klein model, I take liquidity risk into account and draw some interesting conclusions: 1. In the management to Commercial bank´s reserve, the increase to the level of penalty interest rate will lead to a reduction in the number of loans and an increase in the number of deposits; 2. If the behavior of public withdrawal is more uncertain, it is more likely to lead to a decline in the number of loans in most cases.