The Marketization Of Interest Rate Impacts On Profit Ability And Response Of City Commercial Banks In China

Interest rate marketization refers to the process decided by the financial marketcompletely when the monetary authorities gradually cancel the interest rate control, whichis an important part of financial system reform in china. Since the basic assumption ofthe market-oriented interest rate reform, interest rate marketization in China went throughmore than20years of exploration, which has entered the accelerating stage. As China’smarket-oriented interest rate level deep-going gradually, the new force of China’sfinancial system--city commercial banks (CCBs)will be facing basic andcomprehensive change, business risks and species increased, meanwhile profitability hasbeen severely tested.According to the international experience and the empirical results, interest ratemarketization is a "double-edged sword". On the one hand, it can improve thefinancial environment, change the operational way and profit pattern of city commercialbank to improve the operational efficiency and full play to the basic role of marketallocation of resources, On the other hand, the interest rates marketization result inlessening interest spreads of deposit and loan, and reducing profits space, which impact ontraditional profit model of bank. Therefore, in the interest rate marketization reform, citycommercial banks must foster strengths and circumvent weaknesses, adjust businessstrategy timely and change the mode of operation, and then improving the abilityof respond to market risk, expanding the new profit growth point, in order to adapt tothe interest rate. marketizationFirstly, this paper explains the profitability related theories of city commercialbanks, which provides theoretical support for the following discussion.Secondly, the interest rate marketization brings opportunity and challenge for citycommercial banks, while analyzing profitability of Bank of Beijing, Bank of Nanjing andBank of Ningbo Bank by paired T test model. This part is the priority amongpriorities. Finally, put forward to policy recommendations to enhance the profitability ofcity commercial bank, combined with its characteristic.