The Financial Risk Assessment Of Listed Commercial Bank In China Under Interest Rate Marketization

Interest rate marketization is a must for financial markets development andimprovement in China, which affects financial markets and also economicdevelopment and efficiency. However, as a significant part of financial markets,commercial bank will also be influenced by the interest rate marketization reform.The boost of interest rate marketization is both a challenge and opportunity forcommercial banks. Because of its profit model of interest spreads of deposit and loan,commercial bank as well as the stabilization of banking system will face severeimpact. Meanwhile, the operation and management mode of commercial bank will beunder severe tests. As the deepening of interest rate marketization reform, there mustbe management financial risks during the course of operation and innovation ofcommercial bank. Therefore, performing a reasonable assessment of financial risks ofcommercial bank from the angle of risk prevention is significant and practical for thesound development and sustainable management of bank industry.This article firstly analyzes five fundamental theories: all-directions riskmanagement theory, asset management theory, liability management theory, financialinhibition theory and financial deepening theory. It studies the current research statusin and out of China in depth, and provides fundamental theories and references for thefinancial risk evaluation of national stock-listed commercial banks. Secondly, underthe reform procedure of interest rate marketization in China, this article analyzes theimpact of interest rate marketization on commercial banks. With the analysis ofexperiences of market reform in major countries worldwide, it provides practicallessons for the reform of interest rate marketization in China. Thirdly, this articleanalyzes the financial risk content of commercial banks, and designs11riskassessment indicators through learning from capital adequacy indicator, capitalquality indicator, profitability indicator and liquidity indicator. Fourthly, from theangle of risk prevention, this article analyzes interest sensibility of16stock-listedcommercial banks in China, and evaluates the financial risks of11financial indicators of the listed commercial banks from2011to2012. The research results indicate thatinterest sensibility gap exists in most listed commercial banks in the country,especially for Bank of China, Agricultural Bank of China, Industrial and CommercialBank of China, China Construction Bank and Bank of Communication, whichmeanwhile bear more interest risks. The most influential factor for financial risk iscapital adequacy risk, and the financial risk control level of five big commercial banksis relatively high. Finally, the article provides rationalized suggestions for financialrisk control for commercial banks in the country, relying on the research result ofinterest sensibility and factor analysis.