The Study On Development Strategy About Urban Commercial Banks Under The Interest Rate Marketization

The interest rate is the core of modern economy, its trend changes can influence the entire financial market. McKinnon and Shaw’s "financial repression theory" and "financial deepening theory "advocate the liberalization of interest rate, interest rates independently decided by the market and the elimination of interest rate controls drawbacks. According to this theory, many countries try to release the interest rate controls in order to form the interest rate determined by the market.Since the reform and opening up in1978, China’s socialist market economic system is basically formed, but the cost of capital-the interest rate is still not fully liberalized.With the development of the finance, interest rate liberalization is the trend. Since releasing the inter-bank interest rate in1996, China’s gradual reform of interest rate marketization has experienced over17years. In2008, due to the outbreak of the global financial crisis, Chinese interest rate marketization faces up a a temporary stagnation. In2012, China’s market-oriented interest rate process has significantly accelerated. During the period of Twelfth Five-Year Plan, China’s interest rate liberalization will enter a full speed development period.Along with the further advance of market-oriented interest rate reform in our country, interest rates will be more flexible. It will inevitably have an impact on market players. As a micro subject in financial market; commercial banks will also directly face the challenge of marketization of interest rates. Although our country commercial bank off-balance-sheet revenues accounted for the proportion of income gradually increase, the interest income is still the main source of income, especially urban commercial banks. In recent years, urban commercial banks have developed at a fast speed. But compared with other big banks, many aspects are still at a competitive disadvantage. As a result, how to help urban commercial banks realize leap-forward development under the background of interest rate liberalization becomes an urgent problem in the banking of our country. Based on the characteristics of the development of urban commercial banks, this paper respectively uses the theoretical analysis and empirical analysis, combining qualitative analysis with quantitative analysis method to analyze the opportunities and challenges which urban commercial banks will face by drawing lessons from successful experience of Hong Kong interest rate liberalization and interest rate sensitive gap management method。Finally, this article focus on putting forward the suggestion about how to resolve the problem occurred in interest rate liberalization.The main contribution of this paper is that it proceeds from the perspective of the urban commercial bank. This paper summarizes the characteristics of its development of city commercial banks, analyze the risk and impact under the process of interest rate marketization of urban commercial banks in-depth, and put forward corresponding strategies. In addition, this paper use the latest data in bank report to demonstrate the interest rate risk of urban commercial banks faced in the process of interest rate marketization from the interest rate sensitivity index.Meanwhile, in the stress testing, deposit and loan interest rate adjustment is divided into two situations-consistency and inconsistency. This practice’s purpose is to comprehensively measure the rate risk which urban commercial bank face.