Empirical Analysis On Interest Rate Risk Control Of Commercial Banks

After joining the WTO, China needs a mature and perfect socialism market economy system, and the reforming of a market-oriented interest rate is an important step to establish a sound market economy. We must be aware that reform is always with risks, so we should try to do something actively to avoid risks and reform steadily. Interest rate is the price of loan fund, one of the important economic variables, and also an important lever to optimize the allocation of resources. Interest rate connects services and financial sector. Interest rate will be more uncertain after Market-oriented lnterest rates reforming, so it will seriously affect the commercial banks which take interest rate gap as major source of profits. Therefore, our commercial banks must strengthen (?). Most of China's commercial banks, lack sufficient knowledge of interest rate risk, their lax management and backward technology make them vulnerable. So research and analysis of interest rate risk control becomc major task for China's commercial banks.At present, China's financial reform has entered a crucial period and all financial markets will gradually open up to foreign investment in a few years. In the face of international and domestic economic and financial situation, we have to understand clearly the series of market-oriented interest rate risks. We could use various financial instruments and financial models to accurately measure the risk, to analyze risk, and to control the risk. It is of important theoretical and practical significance to find a suitable way to control the interest rate risk.This article is based on the theory and practical analysis of commercial banks, and we try to give some reference to China's commercial banks. In this paper, we base on the Basel Committee's interest rate risk management principles and Western banking experience to identify, classify and measure interest rate risks. We study sensitive gap management, duration management techniques and VAR, and simulation model of the commercial banks, and then study on how to control and manage the interest rate risk. We also analyze the specific micro and macro environment to support the reforming of commercial banks to build a sound firewall to interest rate risks. We study on how to use the above-described methods with the results of empirical research system and get the result that our commercial banks are still exposed to high risks. Finally, we get a conclusion that China's commercial banks should adopt strategy to analyze and managc the interest rate risk cffectivcly with suitable technology and system.