Factors Affect Shanghai Interbank Offered Rate

For complying with the accelerating process of the interest rate liberalization,China released Shanghai Interbank Offered Rate officially on January4,2007. As theborrowing money’s market price, Shibor is used to deploy the social resources, andcontact the real and the financial economy. So studding its running mechanism andinfluence factors will help us better analysis of the whole market liquidity conditions,make effective policies, and maintain the healthy development of the financial market.We start from the theory of the interest rate and its running mechanism. Accourdingto the date between2007and2012, we use Eviews software, conduct the stationary test,Granger causality, Co-integration test, and establish VECM. We concluded that, Shiborhas impacted by the growth rate of money supply, financial institutions deposit loandifference, the price index, stock price index, the legal deposit reserve rate, repurchaserate and Libor in the long run; and impacted by the financial institutions deposit loandifference, the price index, stock price index and the legal deposit reserve rate in shortterm.Based on the above analysis and combined with the operational mechanism ofShibor, the financial policy of China, we table some proposal for the development ofShibor and the transmission of monetary policy. We hope it will helpful for the futureanalysis.