The Research On Interest Rate Risk Management For Chinese Commericial Banks

Because China has always implemented the strict interest rate control system since long time ago, China's financial market was not developed, the interest rate risk(IRR) Chinese commercial banks was facing was small relatively to the credit risk. However, the establishment of the inter-banks funding market in 1996 signified the substantive progress of China's market-oriented interest rate reform. The problem of how to guard against the IRR was presented in the front of Chinese commercial banks practically. The establishment and the improvement of the financial market, the continuing emerge of the financial derivative products such as the SWAP, FRA, ABS make it possible for Chinese commercial banks to use many kinds of financial tools to manage the IRR.This paper firstly introduced the understanding of western commercial banks on the IRR management and the main methods they used to measure and manage the IRR, Secondly, the paper summarized the macro policy environment of IRR management in China from the angle of macro environment of IRR management, the establishment of the financial market, the reform of the interest rate formation mechanism and the innovation of the IRR management product, and we analyzed the interest rate risk Chinese commercial banks are facing, the present situation of IRR management and the constraints of Chinese commercial banks making IRR management, then based on the actual situations of China, the paper proposed the main strategies and management ways of Chinese commercial banks should take from the angle of bank's whole strategy and the technical implement level. Lastly, based on the present macro economic environment and IRR environment in China, the paper proposed the ways Chinese commercial banks can take in the side of IRR management.