| Interest rate is the price of financial products, plays an important role in economic activity, and a variable macro-control. So for a long time monetary authorities in developed countries and developing countries control it.The commercial banks focus on reducing credit risk,not the interest rate risks.Until the1970s, the world began the process of marketization of interest rates, the main basis for the wave of financial liberalization is McKinnon and Shaw’s "theory of financial repression" and "financial deepening theory", that interest rate controls lead to financial repression, cause interest rates far below the market equilibrium level, the funds will not be effective allocation distortions between financial institutions and corporate behavior. The United States in March1986successfully achieved the interest rate liberalization, Japan in October1994successfully achieved the interest rate liberalization. Due to China’s accession to WTO, the interest rate reform is imperative, because the interest rate market plays an important role in terms of market allocation of resources.Interest rate liberalization is a key step in the process of global financial markets, but the process is full of risks, due to the banking system will face more serious uncertainty. The World Bank study found that44countries implemented the interest rate liberalization, nearly half occurred financial crisis in the process of marketization of interest rates. Such as Southeast Asia, Latin America, Japan and so on.I believe that the interest rate risk will become more and more prominent, which directly related to the operations of banks. While small banks’ interest rate risk-resisting ability is weaker than large state-owned commercial bank,so small banks need to train people to gradually strengthen the interest rate risk control,coping with the frequent fluctuations in interest rates in the future. Therefor the study of the small bank interest rate risk control is very important.In this paper, firstly i introduce the interest rate liberalization process and the situation in China, the interest rate liberalization research on China’s small and medium banks.Then combined with analysis of relevant data of small banks, the paper analyzes the capacity when the banks against the risks, and gives some suggestions of small and medium banks to control interest rate risk,basing on the results of the analysis.There are six chapters in this paper.The first chapter is the introduction of the main significance of the study, research methods and possible innovations and shortcomings. The second chapter introduces the process of liberalization of interest rates, the status of the current interest rate market in china, and the extent of China’s commercial banks’interest rate liberalization.In third chapter, for our small and medium banks, the paper analyzes their impact on the interest rate liberalization.Learning from the successful development of small and medium banks abroad, i sum up the inspiration for the development of small and medium banks under the interest rate liberalization.In fourth chapter,the paper introduces the definition of interest rate risk.According to the duration of the risk, interest rate risk can be separate into two fields:interest rate risk of transition and permanent interest rate risk. By using the data of China’s listed banks have announced, the paper uses the method of scenario analysis analyzing the impact of rising interest rates on small and medium banks, namely the quantitative analysis on small and medium banks’interest rate risk.Furthermore,at the end of this chapter,i use the method of interest rate sensitivity gap is used to calculate the permanent risk. The results showed that the risk of small banks facing is controllable. On the permanent risk of small banks faced are largely re-pricing risk, and therefore need to pay particular attention to to improve their pricing abilities. According to the previous Chapter’s results and the current operating conditions of small and medium banks,the chapter five makes.The main contribution of this paper is analyzing the interest risk from the perspective of small and medium banks. Small banks relative to large commercial banks to manage interest rate risk is relatively weak, mainly due to the bank’s scales, simple technology, a strong dependence on the traditional business, the lack of talented person and so on. So the small and medium banks controlling interest rate risk face greater challenge.Through the establishment of scenarios,the paper estimates the impact of rising interest rates on small and medium banks’ assets、liabilities and net profits.There are a lot of literatures analysis the credit risks on empirical analysis, but on the empirical method of interest rate risk is not mature, which is largely due to the Bank’s disclosure. Although the interest rate risk measurement model has been very mature, but it’s difficult for researchers to learn every bank’s asset and liability structure, the actual cost of the liability, the life of the asset and other investment income. Like VAR measurement model estimates the process is relatively simple and more accurate, but this measurement methods rely on large amounts of data, so it is difficult to meet. On the other hand the author analyzes how the interest rate risk control from the perspective of small and medium banks’specific business and development strategy.Overall interest rates liberalization will increase the interest rate risk in small and medium banks.After the interest rate liberalization, there are frequency and magnitude fluctuations of interest rate.The term structure of interest rates is also more complex. Moreover the industry will become more competitive,the profit of small and medium banks will decrease and the cost will increase.Therefore, compared with the interest rates under control, interest rates liberalization will increase the Banks’ interest rate risk. |
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