The Construction Of China’s Interest Rate Liberalization Index And Its Application

As is known to all, interest rate liberalization is the core of financial deepening reform.Throughout China’s interest rate liberalization reform for nearly 20 years, the results are obvious, and at the same time, our country is in the key period of reform.The paper combines qualitative analysis with quantitative analysis. By choosing events of China’s interest rate liberalization reform as nodes, this paper constructs the index of interest rates liberalization from 1996 to 2015 and its evaluation system for China, and conducts a robustness test by using correlation analysis, the state space model, weight determination method and ratio method respectively upon it.Ending with the effect of China’s interest rate liberalization on Commercial bank performance as an example,the paper using empirical method to illustrate the application of the interest rate liberalization index.In this paper, the index system comprises two levels; with 4 indexes in level one and 12 in level two.The same value coefficient was given to each index.The research result shows that China has completed 93.5% of its interest rate liberalization process,and the successive index of interest rate liberalization provide fundamental data for the quantitative research of interest rates liberalization.The core of the subsequent reform lies on the release of RMB deposit limit,and the stability of financial market and institution should be guaranteed when reform being emphasized, so that the reform of interest rates liberalization could be carried forward steadily.