Interest Rate Liberalization And The Strategic Transformation Of The Banking Industry Of Our Country

Since 1996 interest rates liberalization in China has been implemented, it has been over nearly thirty years. The central bank governor Zhou Xiaochuan in this year NPC and CPPCC period also made it clear that deposit interest rate ceiling lifted will be a big probability event in this year. The interest rate liberalization as an important step in the construction of China’s financial system has a far-reaching impact on the banking industry. From the foreign interest rate liberalization coun tries practice experience, after the interest rate liberalization, preads narrow is a big probability event. However, at present banking industry in our country is heavily dependent on interest income. The interest rate liberalization is bound to compress the profit space of the banking industry, and even affect the survival condition. Under the background of interest rate liberalization, how the banking industry implement strategic transformation is a big problem in front of them. Based on this, this article is from the analysis framework "institutional background strategic transformation performance", discuss the commercial banks’strategic transformation and its performance under the background of the interest rate liberalization.The article is divided into ten chapters. Follow the train of thought "observed phe nomenon-put forward problem-analysis and solve the problem", we explore transformation of commercial bank strategy under the background of interest rate liberalization. The arrangements of each chapter are as follows:The first chapter is the introduction, explains the significance and the background of the article and the framework of the article.The second chapter we discuss the foreign experiences of interest rate liberalization and the reference to China, in addition, we review the whole process of reform of interest rate in China market.The third chapter, we reviewed the existing literature.The fourth chapter is the theoretical framework of this dissertation, puts forward the basic logical framework "the institutional background--Strategic Transformatio n--Performance", and puts forward the three aspects of commercial banks strategic transformation under the background of interest rate liberalization:business structure adjustment, customer structure adjustment andimprove the corporate governance mechanism.The fifth and the six chapter wediscussed the institutional background factors in logic framework, namely the infect of interest rate liberalization on commerc ial banks, mainly reflected in two aspects:net interest margin and banking competition format. In the fifth chapter, with ilateralstochastic frontier model we empirical test of the impact of interest rate liberalization on net interest margins of commercial banks. The results showed the interest rate liberalization will make the net interest margin banking downward deviating from the reasonable level 29.1%, among them, the small and medium-sized banks more vulnerable. In the sixth chapter, we discussed the change of banking competition format under the background interest rate liberalization. With panel threshold model, we empirical test the relation between banking concentration and competition. The results showed that, with financial deregulation, high concentration and high competition will coexist in the banking industry, and small and medium-sized banks survival plight.In the seventh, eighth and ninth chapter, we discussed the three aspects of strategic transformation of commercial banks and its performance.In the seventh chapter, we study the structure adjustment of commercial banks, now the interest income is extruded, commercial banks turn to develop noninterest income. With PSTR model, we investigate the influence of the development noninterest income on its operating performance and risk. The results showed the impact of development of non interest income on operating performance and risk show strong heterogeneity. That is to say for different types of banks, the development of noninterest income show different results. For large banks, the development of non interest income not only improve the performance but also spread the risk; for small banks, the development of non interest income improve the performance but exacerbate the risk. This means that for different types of commercial banks, they should take different strategies. Especially for some small and medium-sized banks, they should according to their own endowments and market environment, develop non interest income moderately, and constantly guard the risk caused by the development of non interest income.In the eighth chapter, we investigated the structure adjustment of commercial banks’customers. Facing increased competition, under the background of interest rate liberalization, the commercial banks seek the customer structure adjustment actively, develop small and medium sized enterprises. Especially for some small and medium-sized banks, have inherent advantages in the development of small and medium-sized enterprises. Develop downward, serve to basic financial system is an important strategic deployment of the banking development in the future. In this part, we construct a loan pricing model, equilibrium solution shows that during deregulation period, small and medium-sized banks tend to loan to small micro enterprise. Finally, we take Minsheng Bank’s Small and micro businesses as an example, discusses the development of small banks and small micro enterprise mode.In the ninth chapter, we study the company governance structure of the commercial banks. Business structure adjustment and customer structure adjustment is an important strategy transformation, which requires an efficient decision-making and operation mechanism to improve its operating efficiency. In the existing shareholder system and mechanism, the introduction of strategic investment institutions can not only attract capital,talent and technology but also rise to external supervision.In this chapter, we use PSM method to analysis the impact of foreign capital participation on commercial banks’ performance, this method can effectively avoid the endogeneity problem caused by selection bias. Empirical test finds that the participation of foreign capital approve the efficiency of commercial banks, but the effect is not obvious. In the future, when seeking long-term cooperation with foreign strategic investment institutions, the regulators should also notice that foreign strategic investment institutions is not only the choice of diversification of commercial banks, private capital can also be excellent strategic partner. In addition, actively promote the listed bank, formation of effective corporate governance structure.In the tenth chapter, we present the conclusion of this paper, the interest rate liberalization is the key institutional background of commercial banks’ operation, commercial banks should seek active strategic transformation; Based on its own endowment and operating capability, different types of commercial banks should arrange corresponding strategy according to its own conditions. As for large banks, they should develop comprehensive business, using scope economy to enhance their competitiveness. As for small and medium-sized banks, they should focus on small and medium-sized companies, develop downward, serve to root financial system, develop retail business, avoid direct confrontation with the big banks; at the same time, in order to obtain more effective and quality competitiveness, commercial banks should strengthen corporate governance, improve the operating efficiency, to seek external cooperation according to their own situation.The possible contribution of this paper is:first, based on the strategy management view of the new institution organization theory, we proposed the basic framework of commercial banks’strategy transformation and its performance under the background of interest rate liberalization. Second, empirical test the impact of interest rate liberalization on banking industry. Third, put forward three fundamental transformation of commercial bank strategy transformation under the background of interest rate liberalization, and make empirical test correspondingly.