Analysis Of The Mechanism Of Interest Rate Marketization On The Profitability Of Listed Commercial Banks In My Country

As the price of capital,interest rate is an important factor of production that can allocate resources and stimulate market potential.Interest rate marketization refers to that financial institutions determine their own interest rate level of financing in the financial market according to supply and demand.That is to say,they transfer the decision-making power of interest rate level to financial institutions,and financial institutions adjust the interest rate level independently according to their capital structure,development level and market competition.Since 1996,China has officially embarked on the marketization of interest rates,ending with the complete liberalization of interest rate restrictions on deposits and loans in 2015.According to the statistics of the annual reports of listed commercial banks in China,the average weighted return on assets and the average total return on assets of commercial banks have shown a downward trend since 2014,which shows that the trend of interest rate marketization has undoubtedly brought great impact on commercial banks.Under the background of liberalizing interest rate restriction,intensifying market competition and facing transformation of traditional commercial banks,exploring the influence mechanism of interest rate marketization on commercial banks' profitability can help and guide commercial banks to recognize the current situation of development,find out the weaknesses of profit structure,and accelerate the innovation of structure and system to adapt to the new financial market after financial reform.Based on the data published in the annual reports of listed commercial banks from2004 to 2017,this paper takes the commercial bank's profit rate and operation index as the research object,uses GMM econometric model,incorporates the bank's safety index,liquidity index and operation index into the regression equation,compares the significance of each index,and quantitatively explores the impact of interest rate marketization on commercial bank's profitability.The results show that: firstly,the marketization of interest rates has a significant positive impact on the profitability of commercial banks,secondly,in terms of bank operating indicators,the bank operating scale has a significant role in promoting the profitability of banks,and the bank operating structure indicators also have a significant impact.Thirdly,the security and liquidity indicators have a significant impact on the profitability of commercial banks.Therefore,in order to enhance the profitability,commercial banks should improve risk management,improve credit quality,change the profit model,accelerate financial innovation,strengthen interest margin management and improve deposit and loan pricing level.