Influence Of Interest Rate Liberalization And Deposit Insurance System To The Profit Model Of Commercial Banks

Interest rate liberalization is the monetary authorities allow financial institutions to determine the interest rate pricing by themselves.Since 1996,China has chosen the gradual way to carry out the interest rate liberalization.The process of interest rates liberalization increases the interest rate volatility,narrow deposit spreads,it will affect current profit model-interest income as the main source of profit,thereby affecting the whole social economic operation.Deposit insurance system is usually accompanied by interest rates liberalization,in order to alleviate the impact for commercial bank,China in 2015 May formally promulgated the "deposit insurance regulations",which will brings both opportunities and challenges to commercial banks.Although Chinese commercial bank has different type,the profit model is single-that banks rely on interest income as the main source of profit and enterprises as main customers.With the gradual improvement of interest rate liberalization and the deposit insurance system,China's commercial banks will face more challenges.On the one hand,domestic scholars only focus on the impact of interest rate liberalization on commercial bank profit model;on the other hand,many works study the impact of deposit insurance system on the profit model of commercial banks in an qualitative view,but seldom combine this two policy together which is biased.This paper combine the liberalization of interest rate and the deposit insurance system together into consideration,to provide new ideas and methods.This paper first reviews and summarizes the previous thesis;then a simple elaboration of the interest rate liberalization and the deposit insurance system in China,including the definition content and process,analyze the effect of both on the commercial banks' profit model in qualitative view;then analyze the influence of interest rate liberalization and the deposit insurance system on commercial bank profit model in quantitative view;finally do a case study for three different type banks to put forward specific proposals.Empirical study is the main part of this paper,this paper chooses the financial data of 14 listed commercial banks in the first quarter of 2008-2016 in the third quarter,select the proportion of non interest income as a measure of commercial bank profit model,and select interest rate gap,deposit/loan ratio,deposit insurance,asset size as variables,a panel regression model is established by using Stata 12.0 software.The conclusions are as follows:first,before the implementation of interest rates liberalization,GAP and NIIR accounted for the negative correlation;after the implementation of interest rates liberalization,GAP and NIIR accounted for the positive correlation that the market-oriented interest rate is conducive to promote the transformation of bank profit model;after the implementation of interest rate liberalization and the deposit insurance system at the same time,GAP and DI is negatively related to NIIR,so it suppress the transformation of profit model.Second,after the implementation of the two policies,if banks expand their asset size,improve deposit ratio is conducive to the transformation of the profit model.According to the empirical analysis and case put forward policy recommendations as follows:first,the state-owned commercial banks must increase financial innovation,increase the OBSA and combined with the network finance financial innovation;second,city commercial banks should increase the interest rate concessions,improve the deposit insurance system.By solving the problem of self payment ability to improve the confidence of depositors,expand the source of deposits;third,the joint-stock commercial banks should expand its profit channels,to maintain its deposit and lending spreads advantage.More than the development of intermediate business can also be differentiated customer management.