Study On The Profit Model Of Rural Credit Cooperatives Under The Background Of Interest Rate Liberalization

China began to promote the gradual reform of interest rate liberalization from 1993 and till now has realized the deregulation of the inter-bank lending interest rate, bond repurchase and trading rate, discount and inter-bank discount rate and interest rate in foreign exchange. At the same time, China's commercial banks have obtained greater autonomy in deposit and loan pricing. In October 2015, the lending and deposit rates were widely deregulated. All of the commercial banks in China are facing new challenges since the traditional profit model with interest spread as the main source of income is hard to meet the need of the new market environment, while the threaten to small and medium-sized banks is increasing due to their weaknesses in pricing and risk management ability. Rural credit cooperatives are important parts of the financial system in China and have contributed a great deal to the rural economy. However, their reform and development process is relatively slow and operating profit relies heavily on interest income, owing to the weak rural social credit, high credit risk of agricultural industry, their own incomplete corporate governance and so on. Interest rate liberalization reform is a double-edged sword to rural credit cooperatives. How to foster strengths and circumvent weaknesses, change the development mode of operation, and expand new profit growth point, is a task of top priority of rural credit cooperatives.Although there are a lot of related researches about the reform of interest rate liberalization and its impact on commercial banks, however, most of them are analyses of the impact on the whole banking sector, or the influence on the state-owned commercial banks, listed joint-stock commercial banks and city commercial banks. This thesis innovatively uses the method which combines theory discussion and case analysis to discuss the reform and transformation of rural credit cooperatives under the background of interest rate liberalization. It firstly analyzes status quo and achievements home and abroad on interest rate liberalization and the profit model of commercial banks, to lay the theoretical foundation. Then it makes a comparative analysis on the process of interest rate liberalization reform in several foreign countries to obtain the enlightenment to the current interest rate liberalization process of our country and draws a lesson in China's commercial banks to cope with the liberalization of interest rate from the historical experience in USA. Next, it makes a brief review of the process of interest rate liberalization in China, and analyzes the current situation and future trend of it referring to the restrictive and encouraging factors. At the same time, it discusses the opportunities and challenges faced by China's commercial banks under the background of interest rate liberalization. After that, the thesis starts with the related concepts and analyses on macro environment to make the case analysis. It analyzes the influences on the 9 rural credit cooperatives in Nanchong City under the condition of interest rate liberalization, from such aspects as assets and liabilities, income structure, business type, pricing and risk management ability and so on, based on the business data in recent years to explore the opportunities and challenges faced by them. In the end, the thesis summarizes the special advantages and disadvantages of rural credit cooperatives.According to the above, the author believes that under the background of interest rate liberalization, rural credit cooperatives must transform the traditional business philosophy from "bigger and stronger" to "fine and excellent". For assets, they should strive to achieve the diversification of assets structure and improve asset utilization ability, gain a foothold in the rural small and micro credit market and highlight their own characteristics in credit, strengthen loan management and improve the quality of loans. For liabilities, it is necessary to further improve customer marketing mechanism to maintain their advantage in savings deposits, strengthen brand marketing and establish their own characteristics, flexibly use the differential pricing model to improve customer loyalty, innovate in designing deposit products and improve the comprehensive income from deposit. At the same time, establish the product pricing system and improve product pricing capacity, push forward the growth of rural e-commerce and online payment service, and pay attention to the cultivation of talents and risk prevention and control.