Research On The Impact Of Loan Interst Rate Marketizatioan On The Profitability Of Commercial Banks

Loan rate liberalization means that central bank gradually lessens control on loan rate until it is determined by supply and demand in capital market. It is an important part of China’s interest rate liberalization. In 2012 and 2013, the process of interest rate liberalization accelerated, the loan rate floor limit was cancelled, and commercial banks gained autonomous pricing power. The shrinking interest difference, growing amount of service kinds, fiercer competition and stronger management risk have brought challenges for commercial banks’ high-profit ability lasted continuously in years.Due to differences in business scope, management structure and service foundation, Chinese commercial banks are mainly divided into state-owned ones and small-and-medium-size ones. The cancellation of loan rate control has different degree of impact on the two groups. Under the background of interest rate liberalization, the ability to gain profit, the adjustment of management strategy and risk control of the two kinds of banks are the focuses for China commercial banks’ reform.Starting from summarizing the process of China loan rate liberalization and present study conditions of commercial banks’ ability to gain profit, on the basis of related theories and concerning the process of China loan rate liberalization reform, the paper nomatively analyzes the possible impact on China’s commercial banks by loan rate liberalization.Due to the fact that both asset scale and service kinds between China’s state-owned commercial banks and small-and-medium-size ones differ from each other greatly, the paper divides 16 listed commercial banks into two categories, forms indicator system according to the data, establishs empirical model, uses T-test for sample pairing, analyzes and explores commercial banks’ ability to gain profit and profit level from short-term and long-term, and states different influences that loan rate liberalization has on two kinds of listed banks. Then the paper comes to related conclusions and puts them in accordance with features of China’s commercial bank system, and gives targeted advice to improve their profit gaining ability.Through the empirical analysis of indicators, the paper comes to the following conclusions. After loan rate liberalization, ROE of the two types of commercial banks increase in short-term, and differs from each other obviously. ROE reduction in long-term is testified to be obvious for state-owned banks but unobvious for small-and-medium-size ones. In terms of NIS, the two groups are almost the same and a slight increase of NIS has been witnessed, together with an unobvious test result. As to the NIR indicator results, state-owned banks’ NIS declines in both period and the test result is unobvious; small-and-medium-size ones’ decrease in short-term is obvious in the significance level of 10% and in long-term an increase has been witnessed, forming a significant contrast. NPL average value increases both in short-term and long-term, all but state-owned banks in short-term have obvious impact, signifying that loan rate liberalization has directly promoted NPL of commercial banks, and the loan risk prevention should not be neglected.