The Interest Rate Market Conditions, China's Commercial Banks To Interest Rate Risk Management Study

With the developing of our economic system reform and financial system reform, interest rate marketization has been pushed gradually. After interest rate marketization, changefully and uncertainty of interest rate will seriously affect earning of China's commercial bank. Thus, interest rate risk will become the major risk in commercial bank of china. But due to the long term interest rate control, China's commercial bank has not paid enough attention to interest rate risk and also has not corresponding method and instruments to manage interest rate risk. How to manage interest rate risk effectively will become an important problem for the management of commercial bank. The paper intends to study systematically interest rate risk management not only in theory but also in practice, analyses the method about how to recognize, measure and manage the interest rate risk, which we hope will be helpful to interest rate risk management of commercial bank in China.Firstly discusses the necessarity and urgency of interest rate marketization in China . Secondly, we analyze interest-rate risks in detail which commercial banks will be faced with after liberalization of interest rates. Thirdly, gap analysis and duration analysis, these two risk measurement techniques and how to use them arestudied .And then, commerce tactics to manage and control interest rate risks and how to use them are researched detailedly. And discusses how to control commercial bank's interest rate risk. In this part, it analyzes the tactics of using balance sheet, the utilization of financial derivatives to manage and avoid interest rate risk. Finally, the paper gives some suggestions on how to construct interest rate risk management system of China's commercial bank.