Empirically Analyses The Influence Of Loan Interest Rate Liberalization On China’s Fixed Asset Investment

In recent years, interest rate liberalization in China experiences continuousexploration and development.Although interest rate market includes many contents, theloan interest rate liberalization plays an important part in China.Ever since1998,Government has made the inter-bank rate no more than the30%of loan interest rate ofcentral bank to bank, the highest amplitude of loan interest rate that financialinstitutions gave to small enterprises has expanded from10%to20%; in1999the loaninterest rate of bank gave to small enterprise expanded to small business lending ratesthe highest broke surface30%, realize the open tender of the issuance of treasury bondsin the inter-bank bond market; by the time of2003,loan interest rate of RMB hasopened the upper limit; in July6th2012the mortgage rate of RMB were adjusted to0.7times of benchmark interest rate. Although the time of loan interest rate liberalizationis shorter than other interest rate projects, the loan interest rate liberalization is thecore of interest rate liberalization. Because the liberalization of loan interest rate mustexperience longer time comparing with other interest rate liberalization,besides the levelof loan interest rate liberalization would effect the interest of commercial banks,depositors and the lenders,so the risk of loan interest rate liberalization is relativelylarge,if it is not controlled appropriately,that would lead to financial crisis. So from thecontent above we can see the importance of loan interest rate,that is why it becomes myresearch object.According to economic theory, the reduction of loan interest rate would increasethe investment in fixed assets.But in China the the relevance between investment infixed assets and loan interest rate is not so strong. So this paper analysis the reason oflow relevance between investment in fixed assets and loan interest rate with the ways oftheoretical analysis and empirical analysis.I started my analysis from the influence ofloan interest rate to fixed assets investment of three industries respectively,at the sametime I can also see the relationship of fixed assets investment in three industries.So fromthe analyses above I can get to know more about the conditions of fixed assetsinvestment in three industries in China.After the in-depth analysis above,I can reaches the reasons why the relevancebetween investment in fixed assets and loan interest rate is not so strong: Thecharacteristics of the three industries results in the weak relevance.For the primaryindustry and the second industry,the main small industries in the primary industry and the second industry are not so sensitive to loan interest rate liberalization which lead tothe weak relevance between investment in fixed assets and loan interest rate.Althoughfixed assets investments of the third industry is sensitive to loan interest rateliberalization,because the proportion of fixed assets investments in the third industrywhich still leads to the weak relevance of investment in fixed assets and loan interestrate.Finally, in order to make the loan interest rate liberalization policy play itsmaximum effect and make the industrial investment structure in China morereasonable.I put forward suggestions to improve the industrial investment structure andrealize the effect of loan rate liberalization and hope to contribute power to the researchof loan rate liberalization.