The Impact Of Interest Rate Liberalization On The Efficiency Of Chinese Commercial Banks

With the development of the market economy and the deepening of the reform of the financial system,developed countries have introduced market-oriented reforms of interest rates,and the issue of financial restraint has become a hot spot in the financial field.China is also actively integrating into the world's development trend and hopes to gradually integrate with the international market.During the reform process,the disadvantages of China's original interest rate formation mechanism gradually emerged.The economic system of a country can be divided into two parts,include real economy and virtual economy.However,the development of the two parts in China is not matched.With regard to the real economy,China's economic system has achieved that the price of most commodities are determined by the supply and demand through more than 30 years of exploration and reform.The allocation efficiency of physical commodities has gradually improved under the constraints of market supply and demand.For virtual economy,the determination of prices is strictly controlled by the monetary management authority,and the flexibility of price changes is far less than goods and services.Therefore,the non marketization of interest rate have restricted economic development to a certain extent,and there is still room for improvement in the efficiency of resource allocation controlled by capital prices.As an important part of the financial industry,banks are the main hubs for capital flows.The operating conditions of the banking industry directly affect the rise and fall of a country's financial market.The focus of interest rate liberalization is to liberalize the management and restriction of interest rates.Interest rates are the lifeblood of banking business,and the spread between deposits and loans is the main source of income for banks.China's interest rate liberalization has gradually entered the deep-water area of existing housing loans by the LPR reform.The reform has reached new heights and put forward new requirements on bank operations.Therefore,it is important to study the impact of interest rate marketization on China's banking industry.As an important part of the financial industry,banks are the main hubs for capital flows.The operating conditions of the banking industry directly affect the rise and fall of a country's financial market.The focus of interest rate liberalization reform is to deregulate interest rates,and interest rates are the lifeblood of banking business.Spreads are the main source of income for banks and China's interest rate liberalization is gradually entering deep stocks of existing housing loans.Therefore,it is important to study the impact of interest rate liberalization on China's banking industry.This article quantifies interest rate liberalization from two perspectives,and selects net interest margin as a variable that directly reflects the degree of interest rate liberalization in the banking industry for subsequent research.Regarding the measurement of bank efficiency,the choice of measurement method is as important as the selection of input-output factors.In terms of method selection,based on the use of non-parametric methods with more accurate results than parametric methods,this paper innovatively uses non-radial directional distance functions.In terms of input-output factor selection,this article creatively considers non-expected output non-performing loans.Based on the existing research,this paper uses the panel Tobit model to explore the impact of interest rate liberalization on the efficiency of banks.Empirical data show that interest rate liberalization has a positive effect on bank efficiency to a certain extent.In order to improve the efficiency of China's banking industry,this article puts forward suggestions based on empirical results.In the process of interest rate liberalization reform,Chinese commercial banks should do the followings.Firstly,understand the financial risks that interest rate marketization brings to bank operations correctly and establish risk management system.Secondly,understand the impact of interest rate liberalization on bank pricing mechanisms correctly and improve industry pricing capabilities.Thirdly,develop financial technology,improve supporting systems,and reduce bank costs by technical means and support the interest rate market.Finally,deepen the reform of bank property rights,expand the size of banks moderately,optimize asset allocation and focus on non-performing assets.