The Influence Of Interest Rates Marketization Upon The Operation Of Shanxi Banking Department Of ICBC And The Possible Countermeasures

In the Report at the 16^th Party Congress, it has been pointed explicitly, "We should carry out the reform steadily to deregulate interest rates to leave them to market forces, optimize the allocation of financial resources..." Since then, the reform of interest rates turns gradually into a core project in the course of the financial system reform. In order to prevent the operational risks and to increase operational returns and competitive capacity, it is significantly important for the commercial banks to enhance the awareness of risk management and to establish and improve mechanism in the risk management of interest rates.Starting with the current situation of marketization overseas and that at home, this paper, in the first place, analyzes the orientation in the development of the marketization of interest rates in our country. Then, based on the current operational situation of the Banking Department of Industrial and Commercial Bank of China (ICBC) in Shanxi, the paper presents a comprehensive and profound investigation into the problems existing in the risk management of ICBC. The influence of the marketization of interest rates upon the operation of ICBC is analyzed to reach the conclusion that such a reform of interest rates is both an opportunity and a challenge. The analysis is carried out on the basis of both our country's interest rates policy and the theories about interest rates marketization and risk management. The key issues discussed here show that the marketization of interest rates will expose the Banking Department of ICBC to greater interest rates risk, competition at market, difficulty in innovation and potentiality of credit crisis. As to these problems, this paper also provides such possible solutions as taking advantage of the joint stock system, adjusting the business structure, improving the price-fixing system of financial products, carrying out the mechanism of risk management, speeding up the establishing of the relevant data basement, and strengthening the training of the staff. This paper makes a combination investigation of the reform of the marketization of interest rates and the operational situation of the Banking Department of ICBC, with both supportive theories and feasible measures. Especially the price-fixing model for depositing and loaning and the relevant case provided in this paper are quite valuable for the research into the reform of interest rates system, and can be very referential to other state-owned commercial banks.