Research Of The Impact Of Deposit Rate Liberalization To The Small Bank’s Profitability

Because that the financial market in China starts late, The government implement policy of Interest rate controls in order to ensure the steady development of the financial market. As the main suppliers of funds in financial market, China’s banking industry has developed fast under the fixed interest rate policy. In addition to the state-owned Banks and the joint-stock Banks, city commercial Banks such as the vigorous development of small and medium-sized commercial Banks has the rapid development; industry average profit margin is much higher than other industries. But with the deepening of financial reform and the development of market economy, a comprehensive market-oriented interest rate has become the necessity of developing financial market. With the liberalization of loan interest rate control, liberalization of interest rates on deposits are expected to thoroughly implement this year.With the completion of market-oriented interest rate reform, market interest rates will experience frequent volatility. Banks face the risk of shock, the traditional business of commercial Banks accounted for a certain decline. The profit pattern of banks which Rely on interest spreads of deposit and loan as the main source of profit management will change. After market reform of interest rate, there will be a higher requirement of commercial bank product pricing and risk control ability. Especially the small and medium-sized Banks, relative to the state-owned Banks’ capital adequacy, customer base,the ability to resist risk and so on various aspects are at a certain disadvantage, market reform of interest rate brings them greater challengesTheoretical basis of The article is financial repression theory which was Put forward by R.I.Mckinnon and E.S.Show. discuss the necessity of the market-based reform of interest rates in the developing countries and deposit interest rate liberalization in our country are reviewed and a brief evaluation. Then from small and medium-sized commercial Banks survival present situation and sources of profit basis, describes the present situation of our country small and medium-sized commercial Banks profit. Then,the article emphatically analyzes the deposit interest rate liberalization of the specific impact on the profitability of small and medium-sized commercial Banks: on the one hand,the liberalization of deposits interest rates increased competition of the Competition in the banking system and survival pressure of small and medium-sized commercial Banks which cause the profit space narrowing; Accompanied the increase of interest rate risk and creditrisk after deposit interest rate liberalization, asset quality deterioration in the small and medium-sized commercial Banks may occur; on the other hand, the pace of financial innovation and further promote will speed up in small and medium-sized commercial Banks which Is conducive to its financial cooperation actively searching for the Internet. In empirical research, the article select the Everbright bank, Huaxia bank, Xingye bank,China merchants bank, Eitic bank, Minsheng bank, Shanghai pudong development bank,bank of Beijing, Ningbo bank, Nanjing bank as the object of samples, and collect the relevant data, using interest rate sensitive gap analysis model, regression model to analyze how the deposit interest rate liberalization impact profitability of the selected nine small banks.At the end of the article, combining with qualitative and quantitative analysis results of the article, drawing lessons from western countries under the interest rate liberalization of commercial Banks, together with the present situation of small and medium-sized commercial Banks business,the article propose some measures to Increase the profit space of small and medium-sized commercial banks under the process of liberalization of interest rates on deposits.