Research On The Impact Of Interest Rate Marketization On The Investment And Financing And Financial Risk Of Chinese City Commercial Banks

The liberalization of interest rate is the core of financial liberalization, and it is an irresistible historical trend. Based on the analysis of domestic and foreign research literature, this paper investigates the influence mechanism of interest rate marketization on investment and financing and financial risk of city commercial banks through theoretical analysis and mathematical model, and then carries on the analysis of the interest rate marketization process and the present situation of investment and financing of city commercial banks. Based on the research hypothesis and the status analysis, this paper uses fully modified least square method and dynamic panel model to test the effect of market interest rates on the investment and financing and financial risk of China's city commercial banks, in order to put forward the scientific and reasonable measures to avoid the negative impact of interest rate marketization. The status analysis results show that the interest rate market is gradually accelerating trend, but the characteristics of the stage is more obvious. The net interest margin of city commercial banks is gradual narrowing, which reflects the negative impact of interest rate liberalization on the net interest margin and income and profit of city commercial banks. The deposit rates and loan rates have declined, and show significant structural differences, and the proportion of demand deposits in the financing structure is lower and the proportion of the fixed deposit is increased. The proportion of securities investment in the Investment structure Accounts for the rapid increase, while the inter-bank lending accounts for a slight increase. The income fluctuation and the bankruptcy risk of the city commercial banks are gradually increasing, But the capital adequacy ratio and the owner's equity ratio decreases, and the rate of non-performing loans increases rapidly. The financial risk of city commercial banks is increasing continuously under the trend of interest rate liberalization.The result of econometric estimation indicates that, the price competition caused by the marketization of deposit interest rates will reduce the deposit ratio of city commercial banks, and the narrowed net interest margin will reduce the financing level of city commercial banks, and deposit ratio will be decreased by fierce banking competition. The effect of deposit interest rate liberalization on different types of deposit has much diversity. The proportion of term deposits in total deposits could be increased, and the proportion of current deposits in total deposits could be decreased by reduced interest spreads of deposit and loan. Interest rate liberalization can reduce bank's call loan but is conductive to intermediate business and investment securities. The marketization of deposit interest rate affects the income volatility, the market of loan interest rate increases the income volatility, and the interest rate marketization under the price competition effect has a positive effect on the income volatility. Through the effect of price competition, the interest rate liberalization will increase the bank insolvency risk, the level of capitalization will be reduced, and the risk of non-performing loans will be increased.According to the research conclusion, this paper puts forward the corresponding policy recommendations from four aspects of changing the concept of development and actively promoting profit model transformation, innovating financing methods and effectively constructing differential development strategies, enhancing interest rate pricing flexibility and setting up reasonable floating interest rate management, creating a good external environment and scientific establishing market risk buffer mechanism.