Empirical Study On The Impact Of Interest Rate Marketization On The Profitability Of Chinese City Commercial Banks

On October 24,2015,the central bank announced to fully liberalize the control of interest rate,marking the basic formation of the pattern of interest rate marketization in China.At present,the city commercial bank,which has gradually become the backbone of the financial market,still takes the net interest income as its main source of profit.The current profit model is bound to be unsustainable under the trend of interest rate marketization,and the transformation is the inevitable result.This paper selects city commercial banks as the research object,collates the annual report data of 20 listed city commercial banks from 2010 to 2019,and points out that the overall return on total assets of city commercial banks is declining year by year;the growth rate of profits is slowing down;and the pressure of bad risks is increasing day by day.The reason is that the marketization of interest rate makes the net interest margin narrow gradually and the interest rate fluctuates frequently.The empirical analysis shows that there is a negative significant relationship between the interest rate marketization index and the profitability of city commercial banks in China.The net interest margin has a greater impact,but the regression coefficient of non-interest income is small.But non-interest income is an important direction for city commercial banks to improve their income structure.The non-performing loan ratio and profitability of city commercial banks are significantly negative.the cost-income ratio has a negative significant relationship with the profitability of city commercial banks,and the large-scale city commercial banks have little impact due to the scale effect.Finally,it is proposed that the city commercial banks in China need to change and optimize their traditional business structure,interest rate management,business innovation and talent construction in order to adapt to the pace of interest rate marketization,and promote their long-term sustainable development in the new era.