The Study Of Interest Rate Liberalization Process And Proposals For Chinese Banking Industry

The new emerging theory of financial liberalization was popular in1970s and thus triggered the reform of interest rate liberalization in manydeveloped countries. The United States and Japan successively completedthis reform since then. Interest rate liberalization has currently become oneof the most important characteristics in a mature financial system.Chinese market economy with a short history started with theimplementation of the policy of reform and open up in1978. In order torelease the economic vitality and promote Chinese economic transition,Chinese government has begun to push financial reform forward in recentyears. Interest rate liberalization is essential part of that reform. However,whether interest rate liberalization does be beneficial and where to gofurther need to be seriously considered and scheduled.The article captures deposit rate as the main clue to analyze thedevelopment of economy and finance in both of United States and Japanfor research into the reform of interest rate liberalization. The power offinancial innovation and deepening development of financial system let thereform become necessary. It is noted that the deregulation of deposit rate isthe sign of ending the reform process.The article also reviews the development of Chinese economy andfinance and summarizes the current achievement of interest rateliberalization in China.Finally, the article draws the conclusion that deepening this reform in China is significant and thus offers Chinese commercial banks whosesurvival environment would change dramatically in future some advice tocope with the upcoming challenge.