Research On China's Commercial Banks To Interest Rate Risk Management

At present, Chinese liberalization reform of interest rates is ongoing. After free-upping interest rates, volatility and uncertainty of interest will seriously affect cost and earnings of commercial banks in China, so the risk management of interest rates should be strengthened. Now most of commercial banks of china don't have enough idea of interest rate risks, and their managing techniques and measures are behind, so they should set-up their efforts, improving their risk management and putting forward comprehensive analyses of market trends, risk prevention strategies and emergency measures .In this thesis ,how to manage and control interest rate risks for commercial banks of china is studies systematically around "risk controlling"not only in theory but also in practice, which we hope will be helpful to interest rate risk management of commercial banks of China .Firstly, experiences of commercial banks of western countries , present conditions of Chinese commercial banks, and managing strategies that commercial banks of China should take under present circumstances are put forward in this paper based on interest rate risk management principles which are established by Basel Committee. Secondly, we analyze interest-rate risks in detail which commercial banks will be raced with after liberalization of interest rates. Thirdly, gap analysis, duration analysis, net present value analysis and dynamic simulation analysis, these four risk measurement techniques and how to use them are studied .And then, commerce tactics to manage and control interest rate risks and how to use them are researched detailedly. At last, an example which further illustrates how to manage and control interest a Rate risks for commercial banks of China is given. Interest rate risk management is a complicated job, so commercial banks should choose appropriate skills and measures to control interest rate risk effectively for keeping their earnings free of adverse influence of interest rate changes.