The Interest Rate Liberalization And Interest Rate Risk Management Of Chinese Commercial Bank: Problems And Countermeasures

Interest rate liberalization is one of the core content of the reform of financialsystem in China. It helps to improve our economic and financial environment and toimprove the efficiency of the financial system. It also brings the invisible hand of themarket into full play so that to promote the development of economy to a higherdirection. However, as China’s financial market started late at a very weak foundation,there’re a lot of problems and difficulties in the process of the liberalization of interestrate. After all, commercial banks in china are lack of independent management abilityunder the condition of interest rate control by the government in the long-term.With the deepening of China’s financial system reform and the process ofliberalization of interest rates continue to advance; interest rate risk plays a moreimportant role in the course of business in our commercial banks. In this case, how todeal with changes in interest rate, and how to improve their interest rate riskmanagement ability, has become an urgent task at present for these commercial banks.Based on the background, the article begins from the theoretical basis of theliberalization of interest rate and the interest rate risk, while advanced experience andmethods in interest rate risk management from foreign commercial bank and the actualsituation are being considered. The author analyzes the interest rate risk indicators bybuilding multiple linear regression model and using the rate-sensitive gap model. Basedon the analysis, to study what are the effects of the interest rate liberalization on returnand risk of the Chinese commercial banks. According to the difficult problems that existin these banks, this article draws the targeted conclusion and puts forward somesuggestions.