Restudy On The Deposit Interest Rate Marketization Reform In China

On October 24,2015,the Central Bank decided to cut in financial institutions RMB loan and deposit rates,at the same time,to no longer set deposit rates floating ceiling for institutions such as the Commercial Banks and Rural Cooperative Financial Institutions,and totally liberalize the restrictions on interest rates.Many studies show that the 20 years of market-oriented interest rate reform in China has been basically completed.After summerizing the related literature at home and abroad,as well as China's 20 years interest rate marketization reform process,this paper concludes that whether China's market-oriented interest rate reform complete should not be only measured by whether the interest rate control fully open,but ignoring the foundation of the interest rate decision mechanism.This is because the relaxation of the interest rate control doesn't necessarily mean money price can be decided by the micro main body which can adjust to supply and demand.Therefore this paper,starting from the internal mechanism of interest rate,studies whether the market oriented reform of interest rates complete or not.This paper will be divided into three parts:the first part summerizes and reviews market-oriented interest rate reform literature both at home and abroad and 20 years market-oriented interest rate reform process in our country,and explains the connotation of the marketization of interest rate—interest rates should be determined by the supply and demand of currency capital market,and the government should give up the interest rate of direct administrative intervention.The second part,based on the essence of the deposit rate,studies the internal mechanism of supply and demand for interest rates on deposits,and seeks for the influencial factors of deposit money supply and demand.The third part respectively builds principal component regression models on deposit money supply and depositmoney demandfrom 1995 to 2010 to determine the structures of deposit money supply and deposit moneydemand,and uses counterfactual analysis and simulation evaluation to study the deposit currency after 2010.Research shows that compared with the results before 2010,the deposit interest rate marketization reform has obviously changed the deposit currency demand structure after 2010,which means the degree of marketization of demand structure gradually increases.But the supply structure of deposit money there takes no obviously changes,and is still in the state of low marketization.Therefore the Central Bank at present should pay more attention to advance deposit interest rate marketization reform of the supply,change deposit currency supply structure,and complete deposit interest rate marketization reform in the true sense.