The Research On Interest Rate Risk Management Of Chinese Commercial Banks

Currently, China's commercial banks are facing many major challenges such asmarket interest rate, reform on banking system and China's entry into WTO, whichmakes it imperative to improve their interest rate risk management. Many problemsexist in this field in China's commercial banks. We lack an independent managementsystem. How to improve interest rate risk management, increase ability to resist riskand face the fierce market competition is one of the serious problems that China'scommercial banks are facing.The present article discusses questions on how to improve interest rate riskmanagement of China's commercial banks. Firstly, it elaborates on the importance andthe status quo of interest rate risk management of modern commercial banks bydescribing the formation of commercial bank's interest rate risk and the quantitativemethod and tools of interest rate risk management;Through analysis of the practice ofwestern national commercial banks in interest rate risk, we summarize the experiencein interest rate risk management of western commercial banks;Through analysis ofthe status quo of the interest rate risk management of China's commercial banks andcomparison of the practice of other banking institutions in this field, we point out thecharacteristics and existing problems in China's interest rate risk management and putforward solutions. These include building a complete interest rate risk managementsystem, making great efforts to develop and derive financial tool market and pushingthe interest rate risk management of commercial banks by following Basel new capitalprotocol. This provides poignant suggestions to the interest rate risk management ofChina's commercial banks.Finally, the present article expounds with cases how to offset interest rate riskwith banking derived products.