Study On Interest Rate Risk Management Methods And Innovation Of China’s Commercial Bank In The Interest Rate Liberalization Reform

The interest rate liberalization reform will bring different levels of interest rate risk to the banking industry, investigate its reason, one is due to long-term interest rate control commercial banks lack of interest rate risk management experience, resulting in the old management methods failed to effectively avoid interest rate risk, on the other hand is due to interest rate liberalization process intensified the frequent fluctuations interest rates, resulting in more uncertainty. This article attempts to reason from these two aspects, analysis of the current methods of interest rate risk management of commercial banks in China is effective and net interest income and net worth changes affected by the adjustment and the reform of the interest rate market benchmark interest rate, which help to judge interest rate risk management level of commercial banks. The study found, in interest rate cutting cycle interest rate sensitive gap method which is most often used in China’s banking industry did not work. A sample of 16 Bank study found that they all maintained a positive interest rate sensitive gap. Commercial banks will be faced with reduction risk of net interest income. Through 16 commercial banks’ net interest revenue growth which was constantly reducing the paper also verified the interest rate sensitive gap method did not be better applied in the interest rate liberalization reform stage. At the same time, limited to the duration gap method of China’s commercial banks lacking the data, the duration gap changes did not applied to the commercial banks in this study, but the net capital quarter-on-quarter growth’s reduce of 16 commercial banks instructed that all commercial banks also lacks the effective use of duration gap method.Through these two reasons’ analysis confirmed that China’s banking industry in the interest rate liberalization stage facing greater interest rate risk. Therefore, commercial banks should raise the interest rate risk management methods as soon as possible to deal with constantly advancing interest rate liberalization. At the same time the paper for commercial banks to provide two kinds of innovation type of interest rate risk management method to solve the contradiction between the interest rate sensitive gap and duration gap, namely the use of index of net interest margin and net interest income and net capital relation or the net assets returns ratio index and net interest income, non interest income and net capital connection. This paper finally puts forward the Countermeasures for interest rate risk management method of innovation, in the initial stage of the liberalization of interest rates, banks can use the net interest margin index model to avoid interest rate risk; in the interest rate liberalization constantly advancing stage, banks can avoid interest rate risk by using the net assets returns index model.