The Research On Effectiveness Of SHIBOR To Be The Benchmark Interest Rate Of China

Finance is the core of the modern economy, thus interest rate which reflects the prices of financial products occupies the extremely important status in the modern economy. On the one hand, the Marketization Reform of Interest Rate is an important step that the financial industry in China become marketized, and on the other hand, the realization of the Interest Rate Marketization is a basic symbol that the economic system in our country has shifted to the market economy. So the current interest rate system becoming marketization is inevitable due to various external factors. At present, there are many kinds of interest rates in the financial market. If we want to build a perfect interest rate system so that we can smoothly realize the Interest Rate Marketization, we need a benchmark interest rate. The determination of the benchmark interest rate has several advantages:Firstly, it will promote the process of the Marketization Reform of Interest Rate in our country. Secondly, it will promote China’s money market and other financial markets to become more perfect. Thirdly, it dredges transmission channel of the implementation of the central bank’s monetary policy. Finally, it provides a reference for the pricing of financial products. Our country had tried to choose the benchmark interest rate from some of the interest rates in the market, but the practice has proved that a variety of interest rates, including CHIBOR have obvious flaws, they can’t really become a benchmark interest rate of China’s money market. On January4,2007, the central bank officially launched the Shanghai Interbank Offered Rate(SHIBOR). The purpose is to cultivate it into the benchmark interest rate of our country. SHIBOR has its own advantages compared with the previous benchmark interest rate. SHIBOR is established on the basis of marketization, so it is a highly market-oriented interest rate. It can not only reflect the supply and demand of the capital on the market, and also can reflect market expectations for the future. SHIBOR has a strong guiding role. On the one hand, it can lead the whole interest rates of money market tend to be more market-oriented. On the other hand, SHIBOR can affect regulated interest rate and is good for the faster realization of the Marketization Reform of Interest Rate. SHIBOR provides a good choice for benchmark interest rates in the currency market. It prepared the ground for establishing perfect interest rate system and is a crucial step in the process of the Marketization Reform of Interest Rate in our country. In conclusion, launching SHIBOR and developing it into China’s benchmark interest rate have very important significances. So it has a certain degree of theoretical and practical significances that to use the empirical method to study of the effectiveness of the SHIBOR as the benchmark interest rate.Through the consult and research of related literature, the author thinks that there are four attributes that can directly affect the effectiveness of SHIBOR and they are marketability, fundamental, correlation and stability. So this paper explore the effectiveness of the SHIBOR in the money market of our country from these four basic attributes through theoretical and empirical aspects comprehensively. This paper includes four chapters. The third chapter is the most important chapter. The detailed content of the four chapters are as follows:The first chapter is the introduction part of the paper, it introduces the background, the significance, the contents, the methods, the related research results at home and abroad, the innovations and deficiencies of this article. This part is designed to point out the conception of the article and to lead the full text.The second chapter is a introduction to the selection criteria of benchmark interest rate and the breeding process of benchmark interest rate in our country. It concludes three sections. The first section mainly illustrates the selection criteria of benchmark interest rate which include several properties; The second section lists some representative benchmark interest rates in the world; the third section describe the construction process of the benchmark interest rate of the monetary market in China and the launching process of SHIBOR. The main purposes of this chapter are to provide the theoretical foundation and background material for the next chapter.The third chapter is to test the effectiveness of SHIBOR through the empirical method and concludes three sections. The first section analyzes the rationality of SHIBOR to be the benchmark interest rate theoretically; the second section introduces the related data and their sources; the third section is the empirical part. In order to test the effectiveness of SHIBOR to be the benchmark interest rate more effectively, SHIBOR is divided into short-term and long-term parts to analyze its effectiveness in this paper. Through the results of the test and analysis, this paper concludes that SHIBOR has achieved considerable success to be the benchmark interest rate.The fourth chapter is the last chapter of the paper which puts forward some suggestions to perfect the SHIBOR from three aspects. The main purpose of this chapter are to summarizes the full text and analyze the above conclusions more deeply.