How Well Did Shibor Do As A Measure Of Interest Rate Compared To Repo Rate

In this essay, we mainly answer the questions how Shibor did as the benchmark interest rate compared to repo rate. In addition, we also discuss why Shibor rate and repo rate differentiate since they are both interest rate. From the empirical study from Jan.4 2008 to Dec.31 2010, we can get the conclusion that Shibor is a better measure of interest rate compared to repo rate from the perspective of determinants and causality. In additional to that, different sensitivity to different economic indicators deduces the gap between SHOBOR and repo rate since they have different formation mechanism.