Research On The Impact Of Interest Rate Liberalization On The Profitability Of Commercial Banks In China

After more than 20 years of interest rate liberalization process,China has basically completed the policy of interest rate liberalization.In particular,with the gradual liberalization of the market interest rate pricing self-discipline mechanism to the self-discipline of the industry in the past two years,the degree of interest rate liberalization in China has been further deepened.Interest rate liberalization enables commercial Banks to have the self-pricing power of financial assets,which is bound to have an impact on the traditional business model of commercial Banks based on interest spreads of deposit and loan,and then has an impact on all aspects of commercial Banks.Affected by this,commercial Banks have implemented diversification strategies to cope with the impact.However,diversification has not achieved the expected effect,and commercial Banks are still in the exploration stage.Moreover,the positive impact of interest rate liberalization on commercial Banks has not been fully demonstrated,and commercial Banks are in the "throes" of interest rate liberalization reform.It is of great theoretical and practical significance to correctly understand the impact of interest rate liberalization and the resulting diversification on commercial Banks in order to improve their sustainable profitability.First of all,this paper analyzes the impact of interest rate liberalization on the profitability of commercial Banks,illustrates the transmission role of net interest margin,and shows that the implementation of diversification strategy is an important means for commercial Banks to cope with interest rate liberalization.Secondly,this paper divides the influence of interest rate liberalization reform on the profitability of commercial Banks into two paths,and studies the reasons why China's commercial Banks are in the "throes" of interest rate liberalization reform.The first path is that interest rate liberalization affects the profitability of commercial Banks by changing the factors of non-diversification degree,and the second path is that interest rate liberalization affects the profitability of commercial Banks by changing the degree of diversification.Through the overall research and the single-path research model,this paper empirically illustrates that diversification has not reached the expected effect of improving profitability,China's commercial Banks are in the " throes " of interest rate liberalization reform,and the poor diversification is part of the reason for this phenomenon,but not all.Last but not least,based on the result of empirical research,this paper puts forward a series of business strategies and specific Suggestions for China's commercial Banks to improve their profitability and shorten the " throes " of interest rate liberalization reform.