The Study On The Influences Of Marketization Of Inters Trates On The Performance Of Commercial Banks

With the deepening of reform and opening of China, the pace of market-oriented reformof interest rates started. Especially, after2000, the pace significantly accelerated andcontinued to make substantial progress. At present, China’s market-oriented reform of interestrate finally left over only the last one juncture, that the deposit interest rate controls are fullyliberalized. The impact of marketization of interest rates began to appear, the reform continuesto heat up the topic. How to promote the market-oriented reform of interest rates, whilemaintaining the sound operation of the banking system, improving the efficiency of financialresources, is an important issue to be studied. The purpose of this thesis are to empiricallyanalyze the impacts of marketization of interest rates, that may be found on the three kinds ofcommercial banks (including state-owned commercial banks, joint-stock commercial banksand city commercial banks), find it’s ways and means to cause changes in yield, and proposetargeted countermeasures.The thesis used the analysis methods to take a combination of theoretical and empirical,based on measuring the degree of marketizationg of interest rates, researching the correlationsbetween commercial banks’ net interest margin, Interest income proportion, operatingexpenses proportion, asset size, and the relationships between those relevant indicators andperformance, in order to find the ways and channels of market-oriented reform of interestrates affecting the performance of commercial banks. In order to observe the impact of theinterest rate marketization to different types of commercial banks, we divided the16listedbanks into three groups, the group of large state-owned commercial banks, the group ofjoint-stock commercial banks and the group of city commercial banks.Through study and empirical analyzing, this thesis reach the following conclusions: thereare strong correlations between higher level of marketization of interest rates and commercialbanks’ narrowing net interest margin, declining interest income proportion, the size of the totalassets of commercial banks. In the process of interest rates marketization, the narrowing ofnet interest margin most significantly affect bank’s operating performance, and the citycommercial banks have the greatest dependence on the incomes from net interest margin.Large state-owned commercial banks have the maximum potentiality to raise the proportionof non-interest income and the strongest capability of withstanding interest rate spreads fluctuations. The changes in operating expense ratio and asset size have different effects ondifferent types of commercial banks.Finally, the thesis proposed four policy recommendations from stabilizing interest ratespreads, improving the income structure, controlling costs, reasonable expanding of assets.Firstly, by improving asset and liability management capabilities, avoid excessive decline ofinterest rate spreads; Secondly,by promoting the development of non-interest income business,reduce over-reliance on interest income growth; Thirdly, by reasonable controlling ofoperating expenses, make operating costs and benefits better matched;Fourthly, prevent theblind expansion of the scale, pay more attentions to the increases of core competencies andmarginal benefits.