Interest Rate Market And Commercial Bank Risk Control

Interest rate marketization (IRM) is a concept raised in view of market control. IRM in modern marketing economy is the interest rate liberalization which completely and flexibly reflects the supply and demand situation of the market funds after the introduction of system administration and national control. Countries with developed marketing economy stepped into IRM system stage from 1960s after 30 years 'interest rate control. At the same time, some specialists put forward theories such as financial control and financial deepening which successfully provide theoretical foundation for the financial reform in the developing countries. Both the developing countries and the developed countries chose reform from interest control to interest rate marketization from different aspect. IRM in our country was put forward in the process of establishing the system of socialistic marketing economy and used the successful experience of the countries under marketing economy for reference.But IRM reform has a great influence on the survival environment and management of our country's commercial banks. How to cope with IRM situation, raise the management level and stay in an invincible position has become the important content in the assets and liabilities management of the commercial banks.This article first expresses the connotation of IRM and reviews the current interest rate policies and theories including different schools' explanation about interest rate policies in developed countries and explanation about theories of financial control and financial deepening in developing countries. This provides theoretical foundation for the comparative study and living example analyses. The second part of this article compares and analyses the executive difference of IRM in the developing countries and developed countries, summarizes the experience and inspiration from the countries that have IRM system, and generalize the IRM reform process and reform thought in our country. The third part of this article emphasizes the analyses of risks brought to the commercial banks by the IRM. IRM decreases the commercial banks' profitability, increases the commercial banks' risks and intensifies the commercial banks' competition.On the basis of explanation of IRM and analyses of risk feature under the situation of IRM, the article proposes the suggestion about commercial banks' risk control strategy under the situation of IRM. This is the final part and the focal part of the article. It includes the following contents such as establishing scientific and reasonable inner funds transfer price and deposit and loans' pricing system, which provide basis for flexibly pricing loans through analyses of western banks' loans rate and customers' credit, establishing commercial banks' risk management system, which is the core content and deeply explains the discernment and control of interest rate gap risk by way of living example, establishing loans precaution system which proposes some new ways to deal with banks' bad assets, establishing financial innovation system which analyses the innovation of interest rate linked financial derivatives, and establishing management focus transfer system which emphasize developing intermediate business and retail business, lessen the puzzlement of interest rate risk and increase the commercial banks' profit sources .