A Study On The Risk Of The Interest Rate Liberalization

Interest rate liberalization reform is undoubtedly the world theme of the financial reform since the seventies of the last century, and have left an indelible mark in the history of economic development of many countries.Some countries have become the overlord of the world economy in one fell swoop through the interest rate liberalization, but some countries are weakened after the interest rate liberalization and never recover.Since China officially open the market-oriented interest rate reform in 1996, the relevant domestic market-oriented interest rate reform discussion and debate has never stopped.A consensus has been reached by scholars that the necessity of the market-based reform of interest rates is unassailable despite a high price may be payed.The early study of interest rate liberalization, more focused on demonstrates the positive impact of interest rate liberalization, mode and path selection. For China, which today has basically opened rate control, knowing the risk of interest rate liberalization reform clearly has become more and more important and urgent. Only fully understand the possible forms of risk on the way to reform, completes the risk plan, to nip in the bud. This is also this article writing motive.There are five chapters in this paper, which can be divided into three parts:The first part include the chapter 1, introduction, and the chapter 2, an overview of the international experiences. This part mainly describes the development of market-oriented interest rate reform in national as well as the predecessors’ research achievements of this process, thus to compare the market-oriented interest rate reform in developed countries and developing countries. Also briefly introduces the influence of interest rate liberalization reform one of the biggest "financial repression theory" and "financial constraint theory", laying a theoretical foundation for this article.The second part is chapter 3 and chapter 4. This part is the core of this article, from the macro and micro two aspects specific analysis the risk of interest rate liberalization reform. Risk in microscopic levels mainly adopts comparative analysis method, mainly examines the market-based reform of interest rates on the market structure of commercial banks and individual businesses, and briefly introduces the two common interest rate risk management model. At the macro level is the multivariate GARCH model is used for the empirical analysis, and focuses on the interest rate liberalization reform of interest rate and exchange rate linkage relations, points out that the interest rate liberalization reform could trigger a currency risk.The third part is the chapter 5, conclusion and policy recommendations. For an overview of the research conclusions are summarized the full text and combined with the specific situation of China’s market-oriented interest rate reform put forward the corresponding policy recommendations.This paper, which is on the basis of the necessity of interest rate liberalization reform and the reform experience analysis of some typical developed countries and developing countries, has carried on a summary of the interest rate liberalization risk type and made a quantitative analysis of the influence of all kinds of risks as far as possible, at the same time points out part of the risk coping strategies, providing a beneficial reference for China’s interest rate liberalization.