Study On The Choosing Of Benchmark Interest Rate On Money Market Based On The Run Effect Of SHIBOR

Since the 80s of the 20th century,it has risen a wave of financial liberalization throughout the world, Countries have relaxed controls on the financial, in which market-oriented reform of interest rates is an important element of financial liberalization.The interest rate on the market-oriented reforms are proposed as strategic objectives on the China's Third Plenary Session of the Party's 14. In 2004, China achieved a "pipe cap interest rates on deposits, lower loan interest rates control" of interest rate marketization reform milestones, but there is still a long way to go from the end of the market interest. To speed up the process of marketization of interest rates, to realize the ultimate goal of market-oriented interest rate reform earlier, we must solve our long-term Benchmark Interest Rate on the money market in the absence of the state. At the same time, establishing the Benchmark Money Market Interest Rates is needed by the building of China's socialist market economy> strengtheniing the links between financial markets and promoting financial market development,changing of Macro mode from quantity-based to price-based,Improving the pricing power of Chinese Commercial Banks.Paper studies Benchmark Interest Rate on the money market based on effect of the operation of SHIBOR. The first part of this paper describes the background, purpose, meaning, the article describes the structure, innovation,weakness, summarizes and concludes previous research results. The second part presents the basic theory of the money market Benchmark Interest Rate options, including the definition of interest rates, Benchmark Rate,the theory of interest rate determination and the theory of monetary policy transmission mechanism.The third part discusses the Necessity of Money Market Benchmark Rates options,the general principles of Benchmark Rates options, and summarizes the experience of International Money Market Benchmark Rates options.The fourth part reviews the interest rates market oriention reforms of China's money markets, the practices of Money Market Benchmark Interest Rate options, and dose a comparative analysis of interest rates existing in our country's money market as a Benchmark Money Market Interest Rates on the advantages and disadvantages.Obtains the conclusions that SHIBOR is most suitable as Money Market Benchmark Interest Rate,compares to other money market interest rates. The fifth part carries out empirical analysis on run effect of SHIBOR in recent and during the period that since SHIBOR is launched. Analysises that a lot of problems still exist in the SHIBOR running, such as the guide effect on other money market interest rates has not yet reflected, the related relationship with macroeconomic variables is not yet stable. The sixth Part proposes the targeted reform and perfect advise for problems exposed in the operation of SHIBOR, barriers and affecting factors existing in the macro environment that SHIBOR relied on.In this paper,uses the summarized,comparative analysis,empirical analysis methods in the study. Two data sample intervals are used to do the empirical analysis on run effect of SHIBOR,,one is a shorter period of time recently on the data sample, one is a longer period of time on the data sample since SHIBOR is launched. Using two different data sample intervals is to study whether the relationship between different SHIBOR varieties based on period and between SHIBOR and other variables in two sample intervals has changed.The different periods SHIBOR have almost the same degree of correlation on the twe data sample intervals, shows that the different periods SHIBOR already have a more stable relationship. SHIBOR and other Money Market Interest Rates have a stable correlation relationship, however, guide effect of SHIBOR as Benchmark Interest Rate on other interest rate has not reflected. The correlation relationship between SHIBOR and macroeconomic variables is still not stable, the guide effect of SHIBOR on macroeconomic variables exists in long term, but this effect does not exist in the short term, indicating the volatility of this relationship is also larger.Therefore, although SHIBOR has a great advantage in becoming Benchmark Interest Rates on the money market,compared to other Money Market Interest Rates. But the function that SHIBOR shoud play as Benchmark Interest Rate on the money market, has not reflected well.There are still lot of work to do for establishment of SHIBOR as Benchmark Interest Rate on money market.