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

The market-oriented interest rate reform is a major measure of China's financial market reform.In July 2013,China completely liberalized the control of loan interest rates,and in October of the same year,the LPR quotation mechanism was released and put into operation.In October 2015,the central bank announced that all deposit interest rates were also liberalized.This measure announced that the process of China's interest rate liberalization has basically been completed.After the introduction of the loan interest rate quotation mechanism LPR,its guidance for commercial bank loan interest rate liberalization is not Ideally,the reform will be carried out in August 2019,and the LPR will be linked to the MLF to promote the integration of China's interest rate "dual track system",which also means that China's interest rate marketization will move toward the last mile.In the context of the further deepening of China's financial liberalization,interest rate liberalization has brought tremendous opportunities to commercial banks,as well as corresponding challenges.Based on the above background,from the perspective of theoretical and empirical analysis,this paper mainly studies the impact of China's interest rate market reform on the net interest margin of different types of commercial banks in China.The research of this paper starts with theory.First,it studies the measurement of interest rate liberalization process and the factors that influence interest rate liberalization on net interest margin,and carefully combs the relevant policy recommendations and processes since the reform of interest rate liberalization.On the basis of the quantitative measurement of China's interest rate marketization process.In the empirical analysis part,this paper builds a panel data model based on the H-S market maker model.Under the background of China's interest rate marketization approaching completion,it systematically examines the impact of interest rate marketization on the net interest margin of commercial banks from multiple perspectives.First,on the basis of constructing a continuous interest rate marketization index,a fixed-effect regression model was established on the panel data of 36 commercial banks from 2003 to 2018,and on this basis,large-scale state-owned banks,joint-stock banks,and urban commercial banks were established.Divide into three groups of samples and perform group regression.Secondly,the loan benchmark interest rate is included in the further analysis,and the degree of response of the commercial bank to the loan benchmark interest rate and the loan base interest rate LPR is examined respectively.The empirical results show that:(1)the marketization of interest rates has a non-linear inverted U-shaped effect on the net interest margin of commercial banks;(2)the nonlinear effect of interest rate liberalization on the net interest margin of China's commercial banks significantly exists in large state-owned banks and Joint-stock banking group,but not significant in the local banking group;(3)The net interest margin of large state-owned banks and joint-stock banks responded more strongly to LPR interest rates and market interest rates.The research in this paper points out that under the background of deepening interest rate marketization,the transformation of commercial banks is imminent,and different types of banks should adopt different transformation strategies.In addition,the response of commercial banks to the LPR quotation mechanism is not satisfactory,and the LPR reform proposed in August 2019 is necessary.Finally,on the basis of theoretical and empirical analysis conclusions,from the macro and micro perspectives,that is,to provide corresponding policy recommendations for the entire banking industry and different types of banks.