Research On Banks' Risk And Banking Supervision Under The Condition Of Interest Rate Marketization

From the international financial development process,the process of the interest rate marketization is almost always accompanied by a certain degree of banking crisis.Regardless of the developed countries or the developing countries such as India,the rapid expansion of loans,violent fluctuation of real interest rates and relaxation of financial supervision make banks fragile,and eventually lead to different levels of banking crisis in the process of interest rate liberalization,In fact,those countries benefited from the interest rate liberalization are also faced with risks and crisis to their banking system.It has been more than 30 years since the Chinese government put forward the basic idea of the reform of interest rate market in 1988,and the current interest rate market process has come to an end.The risk and crisis to banks caused in our country are beginning to show.Therefore,based on our country's basic national conditions,and international banking supervision practices,this paper studies the risk and supervision of commercial banks in the process of interest rate liberalization,and puts forward the feasible suggestions on the reform of interest rate liberalization to prevent bank risks and crisis.First,this paper summarizes and evaluates the related theories of the interest rate market,the bank risk and the banking supervision,discusses the transmission mechanism of interest rate liberalization,and expounds the target and main contents of the bank supervision in the interest rate liberalization.On the basis of the previous theoretical analysis,this chapter is based on the international practice,and discusses the process of the interest rate liberalization reform in the world.This paper mainly summarizes the experiences and measures of bank risk and bank crisis in the United States,Japan,Korea and other countries in the process of gradual interest rate liberalization.The empirical results show that with the increase of the degree of interest rate liberalization,the banking crisis has increased,and the degree of interest rate liberalization is the key factor to lead to the banking crisis.Second,starting from the perspective of bank supervision in the process of interest rate liberalization in the developed countries,this study discusses the development,the status and the effect of bank supervision in the United States,Japan,South Korea and other countries.On this basis,the effectiveness of bank supervision in the interest rate liberalization is analyzed by using the economic data of 50 countries and the Logistic model.On the basis of summarizing the bank's risk and its supervisory experience in the process of foreign interest rate marketization,this paper discusses the course,characteristic and effect of interest rate marketization in China.This study mainly discusses the process,characteristics and effects of China's interest rate liberalization,based on the summary of the previous studies on the risk of banks and their supervisory experience in foreign countries.In this study,a multiple linear regression model was established based on the 38 listed commercial banks of China in 2007-2013,and the impact of interest rate liberalization on the risk level of China's commercial banks was analyzed.Empirical study results indicate that the narrowed net interest margin of the deposit can reduce the volatility of the income of commercial bank,but lead price competition to increase the volatility of bank risks.From the long-term point of view,the interest rate liberalization and price competition will reduce the risk of bankruptcy of commercial banks,but is not conducive to the improvement of the level of commercial banks' capital.Finally,in view of the risk and crisis of Chinese commercial banks in the process of interest rate marketization,this paper then discusses the regulatory policies and their effects on the risk of commercial banks.This study also traces back the changes of banking supervision in China,analyzes the reasons and effect of the risk supervision of China's commercial banks.Through the analysis of the challenge to the supervision of the commercial banks of China by the interest rate liberalization,this study lists the existing problems of the supervision of China's commercial banks and put forward the countermeasures.The results demonstrate that the regulation of commercial banks in China should be transformed from the traditional institutional supervision to functional supervision,from the closed supervision to the open supervision.A macro-prudential supervision system should be established to prevent the bank crises.This study contributes to the theory and practical implication in three aspects: First,the implied logical relationship between interest rate liberalization reform and banking system risk is identified.Second,an effective banking supervising system based on the relationship among interest rate liberalization,banking system risks,and banking supervising system is the necessary access to maintain financial stability.Third,the effectiveness of banking supervision could be improved through the transformation from the traditional institution supervision to functional supervision,the establishment of a macro-prudential supervision system,and the construction of preventing measures of bank crisis in advance.