The Impact Of Interest Rate Marketization On The Profitability Of My Country's Commercial Banks

Interest rate represents the price of money.It is the core of a country’s finance and economy.It has an extremely important regulatory effect on a country’s capital market and money market.Especially in the financial market,interest rates will affect the stability and security of the market.The country’s overall national economy has had a huge impact.Therefore,interest rates have always been an important tool for a country’s macroeconomic regulation and control.For a long time,China has imposed strict control over interest rates.Since 1993,China has started the process of interest rate liberalization following the pace of interest rate reform in developed countries.Until October 2015,the People’s Bank of China announced the liberalization of the RMB deposit interest rate ceiling.China’s interest rate marketization reform was officially completed.In the process of the development of China’s socialist market economy,commercial banks take on the role of financing social funds and realizing the optimal allocation of resources,occupying a very important position.The marketization of interest rates has brought opportunities and challenges to commercial banks,adding a lot of uncertainty to the profitability of commercial banks.Based on the theory of interest rate liberalization and commercial bank profitability,this paper combs and measures the process of China’s interest rate marketization reform,and analyzes in detail the impact of China’s commercial banks in the interest rate marketization reform and the unprecedented opportunities.At the same time,it empirically tests the impact of interest rate liberalization on the profitability of commercial banks from both direct and indirect perspectives.The direct measurement model selects the index return on investment(ROA)that measures the profitability of commercial banks as the explanatory variable.The interest rate marketization composite index(IRL)is used as the core explanatory variable to introduce the macro,meso and micro levels that affect the profitability of commercial banks.Multiple indicators are used as control variables to construct multiple linear regression models.Indirect measurement models still use return on assets(ROA)as explanatory variables to measure the non-interest income ratio(NII)of commercial banking business structure and reflect operational efficiency.Cost-to-income ratio(CI)and non-performing loan ratio(NPL)reflecting risk management as explanatory variables,selecting bank asset size,macro financial deepening index(M2/GDP)and meso-industry concentration(CR5)as control variables to build pluralism Linear regression model.The financial data of 16 listed commercial banks in China from 2006 to 2017 were selected.The data source was the Eastern Fortune Choice database.The Eviews9.0 software was used for panel data regression analysis to test the degree of interest rate marketization for China’s commercial banks as well as three different types of businesses.The impact of bank profitability.The results show that from the direct measurement empirical results,the degree of interest rate marketization has a significant negative effect on the overall profitability of China’s commercial banks,as shown by the interest rate marketization comprehensive index(IRL)for each point increase,commercial bank profitability(ROA)fell by 0.9%.However,in the empirical regression of the types of commercial banks,the degree of marketization of interest rates has not had a significant impact on China’s large commercial banks,joint-stock businesses,and city commercial banks.From the empirical results of indirect measurement,the non-interest income ratio(NII)coefficient is negative,which means that the higher the proportion of non-interest income,the weaker the profitability of commercial banks;and the proportion of non-interest income The impact on different types of commercial banks is different,and the impact on joint-stock commercial banks is most significant.The cost-to-income ratio(CI)has a significant negative impact on commercial banks as a whole and on three types of banks.It can be seen that for any type of commercial bank,controlling costs,enhancing the operational efficiency of funds,and improving the profitability of banks Significance.Non-performing loan ratio(NPL)has a significant negative impact on commercial banks as a whole and joint-stock commercial banks and city commercial banks,but the negative impact on large commercial banks is not significant,which may be related to the monopoly status of large commercial banks.Finally,based on the previous analysis and conclusions,this paper puts forward effective countermeasures for commercial banks to deal with interest rate marketization,in order to help China’s commercial banks to successfully transform in the wave of interest rate marketization.This article has four main innovations.First of all,considering the current problems and the direction of further reforms in the analysis of the process of China’s interest rate marketization,this will help us to grasp China’s interest rate marketization reform more comprehensively.Secondly,we analyze China’s commercial banks from various angles.The impact of interest rate liberalization,this part of the data is the overall data of the banking industry or commercial banks,rather than just the 16 listed commercial banks in the empirical sample;in addition,the empirical model in the conventional multiple linear regression In the model,the market interest rate index of comprehensive measure is selected as the core explanatory variable,and the macro,meso and micro factors that affect the profitability of commercial banks are selected as the control variables,and the indicators are more comprehensive.Finally,the regression is carried out for the all types of and the three types of commercial banks,and the impact of various factors on the profitability of various types of commercial banks is analyzed.The analysis is more detailed.