The Study On The Interaction Effect Of Market Interest Rates And Small And Medium Commercial Bank Liquidity Levels

Commercial banks’ liquidity management has been the main topic in the process of its development and management, because of the impact of liquidity can not be realized or not timely access to the required funds, so that the business is facing a liquidity crisis. After the outbreak of the international financial crisis in 2008, many commercial banks faced liquidity shortages, which made the banks face a crisis of survival, the overall liquidity of the capital market also occurred the rapid transition from surplus to shortage, especially after June 2013, the rapid spread of liquidity shortages in the financial market, the management of liquidity risk has been widespread concern in the industry. With the interest rate liberalization in our country,the instability of market interest rate will be greatly increased, commercial bank liquidity management will also face many new challenges, commercial banks should be more reasonable to carry out the management of the liquidity level, in the same time to make money lending to pay attention to the changes in market interest rates, to ensure the relative stability of bank liquidity.In this paper, the interest rate market as the background, the main purpose is to advise on the management of liquidity risk in commercial banks from the perspective of the constantly fluctuation in market interest rates. The main content of this paper is the mutual influence relationship between market interest rate and liquidity level of commercial banks, and the interest rate from the two angles of market interest rate and non market interest rate, in order to get the different influence on the level of bank liquidity, better put forward relevant countermeasures and suggestions. The mutual influence mechanism mainly manifests in: market interest rates by changing people’s deposit and loan demand and monetary liquidity, the assets and liabilities of commercial banks with impact, thus affecting the level of liquidity in commercial banks; commercial banks by reducing the bank’s own liquidity hoarding to release liquidity to the market, and can be through the inter-bank lending market impacts on market interest rates. In addition, this paper takes the small and medium commercial banks as the main body of the study, which is more sensitive to the change of market interest rate, at the same time, the risk is greater in the interest rate market, this paper will provide a solution to these liquidity risk management.This paper mainly uses the method of theory and practice to discuss the relationship between the market interest rate and the liquidity level of commercial banks, and the empirical research is constructed by using the structural vector auto regressive(SVAR) model. The results show that: the market interest rates has a significant impact on the level of liquidity of commercial banks, the benchmark one-year deposit interest rate is more significant, and in the process of market interest rates, the effect of market interest rate to commercial banks is gradually weakened,the performance of inter bank lending rate to bank liquidity is weaker than the benchmark interest rate; commercial banks liquidity level changes also affect the market interest rate, but the overall impact is less than the market interest rate on the level of liquidity; in addition to, between the two indicators of measuring the commercial bank liquidity level, liquidity ratio can better reflect the commercial banks, at the same time affected by the market interest rate is significant, and the loan deposit ratio as an indicator of the effect is not obvious, sensitivity to weak bank liquidity risk measurement, also verified the rationality of China’s cancellation deposit ratio supervision index. Based on the conclusion, mainly suggestions includes the following five points: timely change business philosophy; abundant liquidity risk management means; improve liquidity management awareness and risk management framework; strengthen the liquidity risk of personnel and information management construction; strengthen the financial environment analysis.The greatest theoretical innovation of this paper is to highlight the two-way dynamic effects between the market interest rate and the level of liquidity of commercial banks, and scholars mostly study the one-way relationship. In addition in the study of interaction process, highlights the effect of non symmetry between them,namely, the effect of the change of the level of interest rates on the market is less than the market interest rate on the level of liquidity effect; at the same time at the market rate of as a cut-off point, respectively study whether the interest rate finishing marketization or not effects the liquidity of commercial banks, this is the innovation of this paper.