The Influence Of Interest Rate Marketization Onthe Profit Of Commercial Banks In China

In the 1990 s,China started the initial exploration of interest rate liberalization and accelerated the pace of interest rate liberalization in the 21 st century.From 2013 to 2015,China's deposit and loan interest rate control has been liberalized,marking the completion of China's interest rate liberalization reform.The lifting of the restriction on deposit and loan interest rates gives commercial Banks more independent pricing power.The interest rate increases with the fluctuation frequency of the actual supply and demand of the financial market,and the competition among Banks turns from the traditional scale expansion competition to the competition in business model and service quality.The development of interest rate liberalization will have two impacts on bank operation: On the one hand,the liberalization of deposit and loan interest rate makes the bank's interest margin income narrow,causes frequent fluctuations in exchange rate,increases the possibility of bank capital loss,and has an impact on the business performance of commercial banks.On the other hand,with the increasing competition in the banking industry,the development of intermediary business has been strengthened,which further promotes various financial instruments,improves the professionalism of banks,and enables banks to find new profit growth points.Based on these two impact mechanisms,this paper aims to study the impact of interest rate liberalization on the profitability of commercial Banks.This paper firstly analyzes the impact of the implementation of interest rate liberalization on commercial Banks through theory and reality,and then makes an empirical test of the theoretical analysis results by establishing a model.Finally,this paper USES the model construction method to deeply explore the role of interest rate liberalization on commercial Banks,conducts the intermediary mechanism test,and explores whether Banks' risk taking plays an intermediary role.Starting from the opening time of interbank lending rate,this paper uses empirical study to study whether the profitability of commercial Banks in China is affected by interest rate liberalization.Based on the panel data of 18 commercial banks in China from 2007 to 2017,a systematic GMM dynamic model is established for empirical research.The results show that:(1)Interest rate liberalization has a significant inhibitory effect on the profitability of commercial Banks in China,and the negative effect on small and medium-sized commercial banks is more significant;(2)leverage ratio,noninterest income ratio,cost income ratio and the scale of commercial banks also have a significant impact on the profitability of commercial banks,but the impact of monetary volume and other factors is not obvious(3)risk taking does play an intermediary role in the process of interest rate marketization affecting the profitability of commercial banks.