Research On The Influence Of The Degree Of Interest Rate Liberalization On The Cost Efficiency Of China's Urban Commercial Banks

In 1996,China's interest rate li'beralization reform officially started,which is a opportunity for financial industry,but also a great challenge.The reform of interest rate liberalization undoubtedly affect financial institutions,among which commercial banks are the most influential and direct ones.For commercial banks,the focus of maintainin g and promoting the development of banks is profit,which are affected by cost and income.While compared with income,cost is easier to control.As a key part of financial reform,the core of interest rate liberalization is th e indepen dent p ricing power of commercial banks on interest rates,and the liberalization of deposit and loan in.terest rates will inevitably aggravate the volatility of the interest rate market and thus affect the cost of banks.In order to better cope with interest rate liberalization,banks need to improve their ability to control costs.Cost efficiency is an important indicator to measure the effective utilization of resources and cost control ability,which indirectly reflects the competitive level and sustainable development ability of banks and other financial institutions.Whether interest rate liberalization,the core measure of financial reform,can improve the cost efficiency of banks is the focus of both theoretical and practical circles.Therefore,this paper takes "the impact of interest rate liberalization on the cost efficiency of commercial banks" as the main line of research.Due to easy access to the data,most scholars tend to choose the state-owned banks and joint-stock banks as the research object.However,the research about urban commercial bank disadvantaged in the banking industry is less.Therefore,based on the sample data of 50 Chinese urban commercial banks,this paper conducts a qualitative and quantitative research on the relationship between the degree of interest rate liberalization and the cost efficiency of urban commercial banks.The research content is divided into the following three points:?How to measure the degree of interest rate liberalization in each stage of China's reform process??What level is the cost efficiency of urban commercial bank and how to measure it7?What impact will the degree of interest rate liberalization have on the cost efficiency of urban commercial banks?In order to solve the above problems,on the basis of previous studies,this paper first to quantify the degree of interest rate liberalization,with constructing the i:n dex system of interest rate liberalization according to the classification of interest rates,and setting the scor-ing and weight by index scoring method and analytic hierarchy process.Then,the interest rate liberalization index is synthesized.Secondly,it measures the cost efficiency of urban commercial banks.The paper selects the input-output index based on the financial data of 50 sample urban commercial banks,adopts the transcendental logarithmic func.tion model as the cost efficiency evaluation model of urban commercial banks,and select the parameter method,namely stochastic frontier method(SFA),to measure the efficiency of the sam ple banks by comparing the efficiency measurement method.Finally,this paper adopts Tobit panel data regression model,taking cost effic.iency as the dependent variable,interest rate liberalization as the independent variable,to study the influence of the degree of interest rate liberalization on the cost efficiency of urban commercial banks,and further explores the influence on the relationship between the degree of interest rate liberalization and the cost efficiency of urban commercial banks from the perspectives of equity heterogeneity and regional differences.The results show that:(1)The interest rate liberalization index continues to rise.According to the upward trend,it is divided into three stages through the two nodes in 2004 and 2011.These three stages respectively present different growth characteristics;(2)The cost eff iciency of sample urban commercial banks shows that the cost efficiency of all sample banks is increasing year by year:From the perspective of the overall efficiency value,the cost efficiency of non-state-owned urban commercial banks(both foreign and private)is larger than state-owned banks(both national and state-owned enterpri ses),and the average cost efficiency of the sample cities in the eastern region is higher than that in the middle and western regions,but there is a tendency to close the gap;(3)The relationship between the degree of interest rate liberalization and the cost efficiency of urban commercial banks is shown as a "U".According to the equity heterogeneity and regional differences,the grouping test results of the sample data are shown:Compared with state-owned urban commercial banks,the degree of interest rate liberalization has a m ore significant impact on the cost efficiency of n on-state-owned urban commercial banks.That is to say,equity h eterogeneity plays a regulating role in the influence of the degree of interest rate liberalization on the cost efficiency of urban commercial banks.However,regional differences have no significan t influence on the relationship between the degree of interest rate liberalization and the cost efficiency level of urban commercial banks.