Research On The Impact Of The Interest Rate Market Performance On Our Listed Small And Medium Sized Banks

Currently the interest rate market reform has come to the most important root: thedeposit interest rate cap.Based on annual reports of listed small and medium banks andhistorical data analysis,we find the impact of the interest rate market could conclude to theirperformance of listed small and medium banks.Over-reliance on commercial bank deposit andlending interest structure leads to poor performance of large interest rate sensitivity.From thebanking industry generally profit model,the banks profit margins will progress further asinterest rates and market-oriented reform was the reverse change,that is the higher the level ofmarket interest rates,bank’s profits space will tend to be small.To reap the full profits whilemaintaining the Bank ’s comparative advantage in the competition in the industry,the industryis bound to exacerbate internal competition, will have greater volatility than in the past withina certain period of market concentration.Meanwhile, the interest rate market once the ceilinginterest rate liberalization, which will drive the bank’s ROE return to the industry average.Inthis regression process, listed small and medium banks will be under tremendous pressure tochange the business strategy. Changes include embodied in this stage of its revenue channelsnarrow, larger sequestration pressure. Meanwhile, the interest rate market has increased therisk of small banks listed in the operational process, attention to interest rate risk, a moreprudent choice of business strategy, will likely have a greater chance of operating costs.Shareholders holding shares in listed small and medium banks based on the premise thatthere is a positive risk premium, when operational risks listed small and medium banksincrease, shareholders will require a greater risk premium as compensation for the risk. Thiswill inevitably lead to the listing of small banks in the interest rate market, the results will beexposed to pressure from shareholders.The banks should build all-build high degree ofspecialization, service singularity larger banks, by providing financial support suitable for thecustomer to increase the singularity of financial services, and financial services can not becopied. Meanwhile, the listing of small and medium banks in order to offset the impact of lowerdeposit interest rate differential on the performance, by increasing the amount of net capital,including other banks with the same sequence of small banks launched its all-roundcooperation or acquisition,merger, reorganization;within the framework of the Bank,combinedwith our actual situation, the maximum increase leverage to strike a balance of benefits andrisks to the leverage limit prescribed by the CBRC; increase in non-interest income in theproportion of total revenue structure is to deal with interest rates overall poor performancecaused by the decline in revenue," one size fits all."...