Interest Risk Of Small And Medium Commercial Banks Under The Background Of The Interest Rate Liberalization

In the year of2012,The People’s Bank of China expanded the floating range of deposit and lending rates, and in2013, it cancel the loan interest rate limitation again. it is a ramarkable and solid step of China’s interest rate liberalization reform. While at the same time, Yuebao as the represent of internet financial products directly compete with commercial banks,which forced interest rate liberalization reform from botom. New era,new situation and new demands will accelerate the interest rate reform process, it have a profound impact on improving the socialist market economy, promote optimal allocation of funds, etc. but we should also see that the interest rate liberlization have brought new challenges to commercial banks, especially small and medium commercial banks,the most serious of which is the highlight of interest rate risk. Whether the small and medium commercial banks have the ability to manage effectively the interest rate risk is directly related to their own survival, and the stability and healthy development of the financial sector of our economy. Therefore, it is necessary for China’s small and medium commercial banks face interest rate risk management system of research and exploration.Camparing to the large commercial banks,the small and medium commercial banks face greater interest rate risk in the interest rate liberalization reform, the bankruptcy of a lot of small banks during the interest rate liberalization reform in the United States and other regions is a lesson to our country. Through the using of interest rate sensitivity gap model, long-term model and option pricing model,we found that the interest risk of small and medium commercial banks do have a big gap of large commercial banks. The specific reasons include as the following:First, the lack of a tailored interest rate risk management for small and medium commercial banks, leading to small and medium commercial banks generally difficult to calmly face the complex interest rate risk; Secondly, because the core capital adequacy and intermediate business income of small and medium commercial banks are smaller, resulting in the ability to respond to interest rate risk is weak. Again, small and medium commercial banks homogeneity with the huge commercial banks; finally at a disadvantage position in the interest rate pricing as well as its client object is a greater risk of default of SMEs.To effectively solve the problems of small and medium commercial bank interest rate risk management in the present, to enhance the ability to manage interest rate risk of small and medium commercial banks,it is imperative to build up capable management system afor the small and medium commercial banks.The management system includes interest rate risk management organizational structure,deposit and loan interest rate pricing models, the manage stragey while the short and long term should be two-pronged approach, through the using of financial derivatives, cooperating with other commercial banks on interest rate risk management, the implementation of comparative to improve their interest rate risk management capabilities. I believe that with the continuous development of small and medium commercial banks, the more attention was paid to the risk of rising interest rates, the strengthen risk management capabilities, the small and medium commercial banks will be able to effectively respond to the challenges brought by the interest rateliberalization refom and play an important role to support entities for economic development.