Research On Commercial Banks’ Profit Model With The Liberalization Of Interest Rate

Interest rate liberalization is one of the important tasks of financial reform in ourcountry. After the canceling of RMB loaning interest rate control in March of2013, thecentral bank lowered the benchmark of RMB deposit and loaning interest rates inNovember of2014. The move showed that the reform of interest rate liberalization inour country is gradually deepening. The new task of RMB interest rate liberalizationwill be canceling the control of deposit rates, and forming a new mechanism of loaningand deposit rates decision. Under the impact of the interest rate liberalization in ourcountry, commercial banks’ interest-income-dominated profit model is facing hugechallenges. The source of funds of commercial banks and the cost of capital will bebadly affected. In order to survive and to develop in the competition, how to shift theprofit model of commercial Banks shall be as an important research subject.In this paper, we study the theories of interest rate liberalization and commercialbanks’ profit model. Then we summarize the transition of profit models of commercialbanks under counties with different developmental levels and analyze the influence ofinterest rate liberalization reform on commercial banks’ profit model in our country.Taking American and Japan interest rate reform experience as two examples, the thesisthen through panel data model to empirical analyze the factors that influence thecommercial banks’ profitability. Finally, on the basis of the above research,countermeasures and suggestions on the transition of commercial banks’profit model ofour country are put forward.To change the traditional profit model of commercial banks in our country, banksshould strengthen financial innovation and improve the competitiveness of theintermediary business. They also need to optimize the credit structure in order topromote the balanced development of the traditional business. At the same time, theability of risk management of commercial banks should be improved. Introduction ofinnovative talents and staff training are also important aspects. The ability of pricingcommercial banks’ products should be improved and banks need to establish brandawareness and strengthen the brand publicity. For the different types of commercialbanks in China, diverse measures should been adopted to realize profit modeltransformation. At the same time, commercial Banks profit model is affected by theeconomic environment. The government should strengthen the main status of commercial banks and perfect the market system to provide a good externalenvironment. Regulators of banks also should strengthen the supervision and perfect theregulations. In addition, commercial banks should strengthen the corporate governanceof itself to improve the ability of risk management.