The Impact Of Interest Rate Liberalization On Commercial Banks Of China And Its Solutions

In recent years, as the focus and core of China’s financial reform, interest rate liberalization is significantly accelerated. On July 20,2013, according to the instructions of the state council, the people’s bank of China fully liberalized the restrictions on China’s lending rates of financial institutions. Currently, in addition to the RMB deposit interest rate ceiling is not open, the vast majority of market interest rates have been achieved, market-oriented interest rate reform in our country has entered a stage of comprehensive sprint. Interest rate reform, can expand the autonomy of commercial banks, provide favorable conditions for financial innovation and promote fair competition in the financial institutions, which is a necessary condition to improve the mechanism of China’s commercial banks and improve their competitiveness. But in the short term, the interest rate liberalization will bring serious impact and challenge to the commercial banks in the long-term interest rate control. Therefore, the current research on market-oriented reform of interest rates on the impact and countermeasures of China’s commercial banks, to improve socialist market economic construction, optimize the allocation of market resources, and realize the sustainable development of commercial banks and promote financial support for the real economy, has important theoretical value and practical significance.This paper mainly discusses the impact of interest rate marketization reform on China’s commercial banks through the combination of theoretical and empirical methods. The relevant research literature at home and abroad are reviewed, the interest rate marketization reform of the international experience, the process of China’s interest rate reform and the current situation of commercial banks in China were summarized, and then on the basis of combining the current macroeconomic situation and using the latest economic data, this thesis analyzes the impacts and challenges of the interest rate liberalization to the development of China’s commercial banks. After that, according to the above analysis of the deposit and lending rates under the changes of interest rate marketization, using interest rate sensitive gap model, this paper simulates the three cases of mild, moderate and severe in the interest rate market in the empirical part. In addition, this article makes a quantitative analysis of the impact of non-parallel changes of the savings and loan interest rates on commercial bank’s net interest income and profitability, determines the size of interest rate risk of commercial bank. Finally, the paper puts forward the strategies for the development of China’s commercial banks under the condition of the interest rate marketization.Through qualitative and quantitative analysis, this paper considers that the interest rate market has a huge impact and challenge to China’s commercial banks’ profitability, risk control, pricing power and business model. In order to remain invincible in the interest rate market competition, commercial banks need to strengthen their capacity-building and change the operating mode of development. The purpose of this paper is to provide some valuable references and suggestions for the commercial banks to deal with the interest rate liberalization, to contribute my own strength to promote the reform of the interest rate marketization in China.