Study On The Impact And Countermeasures Of Interest Rate Marketization On City Commercial Banks

The interest rate marketization reform is very important for China’s financial reform, is the only way for China’s financial market to mature, At present, China is in a critical period of deepening the interest rate marketization reform. The interest rate marketization reform had a significant impact on financial market, especially in the banking sector, and the smaller, weaker foundation but a large number of the city commercial banks even more. A direct result of the interest rate market is the deposit and loan spreads narrowed, profitability city commercial banks have had a direct impact, reducing the profitability of the business. Reduced profitability weakened its ability to resist risks, increasing the firm’s business risk city, especially the interest rate risk, so this paper research on the impact and countermeasures of interest rate marketization to interest rate risk of China’s city commercial banks.This paper selected11city commercial banks, Industrial and Commercial Bank of China and China Merchants Bank in the relevant data between2007-2013, analyzes the impact of interest rate marketization of city commercial banks, The study showed that:At present, the development of the city commercial banks’intermediate business are slowly, savings and loan spreads are still their main business. The interest rate market maked profit margins shrinked frequently, reduced their ability to withstand interest rate risk, increased in non-performing loan ratio. According to the process of market interest rates, described different risks commercial banks faced before the interest rate reform, ongoing the interest rate reform and after the interest rate reform. Then analyzes the model for the measurement of interest rate risk which are currently used by China’s commercial banks: Interest rate sensitivity gap model, Duration Model and VAR Model. Then used the relevant data based on the11city commercial banks, Industrial and Commercial Bank of China and China Merchants Bank between2007-2013, used Interest rate sensitivity gap model empirical analyzed rate risks the city commercial banks faced. The study showed that:The ability of risk control for the city commercial banks were not so well. The reason may be due to the weak foundation of the city commercial banks, their risk awareness is not strong, the ability of risk control is not good. While the external environment there are also other issues, such as excessive government intervention, financial markets are underdeveloped and lack of supervision. From the perspective of city commercial banks suggested that:they should be located in the local economy and SME Service, develop intermediate business to enhance their ability to withstand interest rate risk and strengthen awareness of risk control. From the perspective view of the external business environment suggested that:mixed bank should gradually liberalized in order to secure the city commercial banks to expand more investment banking to increase their profitability, bank deposit insurance system should be introduced as soon as possible, strengthen the construction of financial markets, while regulators should strengthen supervision of city commercial banks.