The Research On Development Of Interbank Business Among China’s Commercial Banks

Since global economic liberalization and integration process has accelerated from the 21st century, domestic financial environment has changed significantly. Market-oriented interest rate has greatly impacted the traditional commercial banking business model to rely on spread income, and economic capital constraints and financial regulatory policy also force commercial banks to adjust their business ideas. Still mixed-operation requires banks to adjust their service functions and achieve business innovation. In this context, interbank business has come into being and won rapid development.Interbank business originally limited to lending and borrowing among commercial banks to solve short-term liquidity, but now it changes significantly. Commercial banks unite with brokerages, fund companies, insurance companies and other financial institutions to use interbank funds or financial resources to expand the variety of off-balance sheet assets. In addition to traditional interbank deposits, lending, interbank rediscount bills, now interbank payment, interbank settlement, resale and other innovation appear.Interbank assets and liabilities expand rapidly, and among the main banks, assets of state-owned commercial banks grow faster relatively. Also banks of corporation limited show rapid development, especially industrial bank Co., Ltd and Minsheng banking. Comparatively, city commercial banks grow slower. With the expansion of interbank assets, interest income of interbank business accounts for bigger proportion of total income, and profitability increases steadily.The reason for fast development of interbank business is that bank can arbitrage through interbank assets and maturity mismatch. However, this mismatch implies huge risk. And over capitalization of non-standard assets has laid huge trouble. The Money Shortage crises require commercial banks to recognize the importance of liquidity management and examine the development of interbank business.In order to develop healthy and orderly, commercial banks need support of mature markets, sound regulatory policies and liberalization of the market environment, these are directions of commercial banks in the future efforts.