Interest Rate Market And China's Commercial Banks To Interest Rate Risk Management

The importance of interest rate in economy should never be understated both in academic studies and in the real world. From J.M.Keynes to J.E.Stiglitz,many economists has pointed out that as a variable that bridges the financial market and the real economy,interest rate affects investment and savings thus the whole economy both domestically and internationally. So interest rate theory and interest rate policy have always been the debating focuses in academic circles of macroeconomics and monetary economics. In the real world,changes in interest rate policy in various countries have usually experienced a dynamic process from laissez-faire to regulation,and to deregulation, during which some countries benefit a lot from their interest rate policy reform while some countries are negatively affected or even caught in crises for some failure in their interest rate reform. As for China,the interest rate reform with the aim of interest rate liberalization both for deposit rate and loan rate is becoming one of the most critical problems facing China's economic reform,especially the reform in financial market. In China's nearly twenty years economic reform,China's government has adopted many measures to promote free competition in commodity market,making price the deciding force in the market. But in the financial market,the interest rate,"price of capital",is still controlled by the central government. This practice has impeded the efficient allocation of economic resources and cannot maintain any longer. Although China has initiated its interest rate liberation reform,theoretical basis of interest rate liberalization,various measures should be adopted at different stages and what consequences the reform will bring to China's economic development have not been thoroughly studied. The whole article introduces the interest marketing theory,analyzes the importance of the interest reform and the facing problems,studies the way of interest reform,devotes an empirical and comparative analysis to give some advice,and last focuses on the interest risk which will affect the state-owned commercial bank,and how to avoid the interest risk.