Study On How The State-owned Commercial Banks To Meet With The Challenges Under The Backgrounds Of Interest Rate Liberalization And Finance Internationalization

Interest rate is the price of funds, it should be determined by the relationships of the supply and demand of funds in the market, the liberation of interest rate in the developed country which began from 1980s reached the goal.The progress of our country's liberalization of interest rate accelerates recently. The Sixteenth Congress declares to "push forward the reform of the liberalization of interest rate steadily, in order to optimize the disposition of finance resources". At the same time, the voice of RMB's free exchange can be heard frequently, Mr. Guo Shuqing, the head of SAFE said the other day that, the progress of the free exchange of RMB under the capital column will speed up. The free transformation from local currency to foreign currencies will enlarge the range of the fluctuation of RMB exchange rate, which will then influence the interest rate and enlarge the interest rate risks under the liberalization of the interest rate. The fluctuation of interest rate will influence the distribution of benefits of people , bring risks to the subjects of loan and invest. The liberalization of the interest rate will surely bring some adverse impacts on the four state owned commercial banks of China, bring great challenges to them on their run and management. In fact, after China's entry into the WTO in 2001, the four banks have been suffering from the dramatic competition from the foreign banks. The increasing interest rate risks will be a very difficult examination to them all.What can the four banks do to cope with the difficulties conies from the interest rate reform, the RMB's free exchange and the competition of the foreign banks? According to my opinion, firstly, the four banks must accelerate their reforms of ownership, establish good corporate governance framework and ensure the well performance of the mechanism; secondly, the four banks must accelerate theirsteps on decrease the ratio of their bad assets and do great endeavors to develop the medium businesses and improve the structure of their business incomes; thirdly, their must learn from the foreign banks and grasp the advanced measures of interest rate risks management.The study and practice of management of interest rate risk in the developed countries obtain great progress. Studies on Financial Engineering provide us some financial instruments to manage the interest rate risk. Mainly include the financial instruments such as forward rate agreements , interest rate futures contracts, interest rate swaps , options, and etc.The study and practice of management of interest rate risk in China is still very weak, to introduce the advanced management techniques is very necessary.The author of this thesis tries to study how can the four banks resolve the difficult problems they will face to after the liberalization of interest rate . In the thesis, the author firstly analyze the problem of the liberalization of interest rate in our country, such as the progress of liberalization and its influences, then he analyze the impacts of the foreign banks competition after China's entry into WTO, then the author probes the free exchange of RMB under the capital column and its influence on the four banks. On the basis of those, the thesis make a thoroughly study on the concret measures the four banks can take . Because of the limit of some factors such as the authors knowledge and capability and the few references, the study must be junior and tentative, wish it can provide some helps to the further study.