An Analysis On The Business Risk Of The Chinese Commercial Bank Under Deregulation Of Interest Rate

Interest rate is price of capital. Deregulation of interest rates means regulator to release the restricted clauses on interest rates. And let the interest rates be decided by the financial market. The international experience has proved that deregulation of interest rate (DIR) plays an important regulative role in realizing the internal-external equilibrium and insuring the effective allocating of financial resources and promoting the economic growth, etc. DIR becomes an inevitable choice for the complete opening of China's economy. The central bank (PBC) put forward the IRM reform idea which is "loans first, deposits later; bigger ones first, smaller ones later; foreign currency first, domestic currency later", defining the reform objective as "establishing the financial institution's deposit and loan interest rate mechanism which is decided by the market demand and supply, central bank regulating and leading market interest rate through the monetary instruments with market mechanism playing prevailing role in allocating financial resources". This dissertation tries forecast the trend of interest rate reform, And introduce measures aimed at restricting risk. Offer the reference to China's commercial banks. The impact of the relaxing capital price on the operation of China's commercial banks is beginning to appear, however the influence can be more and more distinct with the picking up of DIR reform. In the short run, at the beginning of IRM reform, the interest rate can rise quickly and fluctuate frequently; the risks concentrating on the banks gradually; debtor's risk structure changes; inter-bank competition in taking in deposits becomes more fierce; Bank's debt burden aggravate etc. In the long run, DIR can make interest rate risks become the major risks facing banks. In face of the challenges from the DIR, China's commercial banks have many shortcomings and difficulties, such as the weak consciousness of keeping away interest rate risks and incomplete internal organizing structure and pinch of professionals, the unbalance of asset-debt structure. It must be improved and adjusted. Such main measures as can be taken: strengthening the sensitivity of interest rate risks, establishing the basic program of interest rate risks management, using the management technology to deal with the interest rate risks, quickening the establishment and completing of financial products pricing systems, introducing the working cost technology, developing greatly the medium and out of sheet operation, accelerating the financial innovation and developing towards large scale, globalization and collectivization. At the same time, the administration can take effective and corresponding measures to help actively commercial banks advance their capability of resisting market risks.