Research On The Impact Of Interest Rate Liberalization On The Risk Taking Of Commercial Banks

With the theory of financial liberalization being proposed,many countries begin financial reform.Interest rate liberalization is the important content of the reform of the financial liberalization.Interest rate is the price of fund,its liberalized can lead source to the most effective sector.With the financial market and policy gradually improved,C hina also enter into the international trend of interest rate reform,.The liberalization of the interbank lending rate in 1996 marked the beginning of the interest rate liberalization reform.In October 2015,the Central Bank announced the policy that liberalized RMB deposit interest rate regulates,which marked the completion of China's interest rate liberalization reform.The liberalization of interest rate regulate has enabled commercial banks to obtain more independent pricing rights,promoting the effective competition of commercial banks,and greatly improved the efficiency of fund allocation.However,under the background of interest rate liberalization,commercial banks need to deal with such problems as interest margins narrowing,interest rate fluctuations,and intensified industry competition,and banking industry' systemic risk may cause financial risks and even economic crises.Facing with changes in the business environment,commercial banks must adjust their risk-taking behaviors.Hence,this paper aims to study the risk-taking of commercial banks under the marketization of interest rates from theoretical and empirical perspectives,and proposes targeted countermeasures so as to avoid bank risk and refine related policy.Based on the elaborating of the interest rate marketization process and the risk influencing factors,this paper discusses the impact of interest rate marketization on risk taking from theoretical analyzes and empirical research.Firstly,it analyzes the impact mechanism of interest rate marketization on risk taking from the perspectives of theory and model Secondly,according to the introduce of interest rate liberalization progress,it constructs the index system of interest rate marketization,and shows value of the interest rate liberalization level from 1996 to 2016 as the key explanatory variable,which calculated with AHP.Thirdly,selecting 30 commercial banks,including state-owned banks,joint-stock banks and city banks,as samples,we analyze the dynamic panel model by GMM method.The study shows that the liberalization of loan interest rate decreases the banks' risk-taking,and the liberalization of deposit interest rate increases the bank's risk-taking.Overall,it shows a downward trend and then a rising trend.Bank risk is negatively related to the size of assets and return on assets;and it negatively related to economic growth and positively related to monetary po licy.Finally,from the perspective of banks and regulators,this paper proposes suggestions to copy with the risk of interest rate liberalization.