The Empirical Research On The Effectiveness Of Shibor As The Benchmark Interest Rate In China

Since1996, our country has experienced the process of continuous development and improvement in financial market, which results from the reform of interest rates. However, the Benchmark Interest Rate, which is fully market-oriented and effective, has become the urgent need to resolve the key issues to achieve the real market-oriented interest rates. Benchmark Interest Rate, which is known as the core of the reform of interest rates, has an important role in the process of the reform of finance. Shanghai Interbank Offered Rate (Shibor), which is created on January4,2007, is the result of further deepening the reform of interest rates. Accompanied by Shibor, we have made a big step forward in the development of the financial market. But since January4,2007, does Shibor have a significant impact on financial market? What is the extent of its influence? Does it meet the requirements of the various aspects as Benchmark Interest Rate in China? These problems are greatly significant for our reform of interest rate and are worth more in-depth study.Based on the background of reform of interest rates, drawn on existing theory and empirical research at home and abroad, this paper focuses on discussing the important position of Shibor as the Benchmark Interest Rate in money market since January4,2007. Generally, this article is divided into five parts:Introduction. In this part, we discuss that research on the Benchmark Interest Rate has a significant impact on the process of reform of interest rates. After organizing the existing research literature, we find that foreign literature focuses on the study of the term structure of the Benchmark Interest Rate, and domestic literature discusses the choice of the Benchmark Interest Rate and has not yet come to a unified conclusion. Based on this background, we put forward the ideas and methods of this paper.Experience generalization. In this part, based on the explanation of the Benchmark Interest Rate from scholars at home and abroad, we define the Benchmark Interest Rate. After the introduction of major international Benchmark Interest Rate, we summarize the general characteristics of the Benchmark Interest Rate, which paves the way for the following empirical research.Theoretical analysis. In this part, starting from the point of view of the necessity of the Benchmark Interest Rate, we introduce the process of exploration of the Benchmark Interest Rate among market-oriented reform of interest rates. After that, by contrast with Shibor, we discuss the advantages and disadvantages of other interest rates as the Benchmark Interest Rate.Empirical analysis. This part is the core of this paper. Using Granger causality test and other empirical analysis methods, this part makes great efforts to examine the role of Shibor as the Benchmark Interest Rate. In this part, the methods of quantitative and qualitative analysis is always been used.Conclusion, In this part, we make a summary of empirical analysis and find that Shibor meets the standards of the Benchmark Interest Rate, because Shibor is running well from the point of view of marketization, controllability and stability since January4,2007. However, Shibor needs to be improved from the point of view of guidance and correlation. Considering the various limiting factor in the development process of Shibor, we propose some policy recommendations to improve Shibor as the Benchmark Interest Rate in China.Based on existing theory and empirical research at home and abroad, this paper summarizes the general characteristics and basic properties which the Benchmark Interest Rate in money market should own and carries out empirical tests on these standards. Considering the particularity of the interest rates, we argue that it’s reasonable to use more and newer data to carry out an empirical analysis so that interest rates are closely linked with the market. From this point of view, we make some contributions to related research.At the same time, due to the limitations of my own ability and objective factors, this paper still has some inadequacies. During the process of selection of the international Benchmark Interest Rate and summary of the general characteristics and analysis of the basic properties, our analysis is not deep enough so that we cannot provide strong theoretical support for the empirical analysis in this paper. Furthermore, we have not achieved the real market-oriented interest rates, so problems, which result from attributes and characteristics of individual interest rates in money market, may undermine the persuasiveness of the results of empirical analysis. Finally, due to the limitations of my own ability, the methods of empirical analysis still have huge room for improvement.