The Influence Of Interest Rate Liberalization On The Operating Performance Of Local Banks In China

Interest rate liberalization reform is a process of continuous development and improvement of our financial market and an important part of our financial reform.In 2015,the opening of the floating ceiling of deposit interest rate indicates that our interest rate liberalization reform has been basically completed in form,but in essence,we still have two tracks of market interest rate and benchmark interest rate parallel,and the reform of interest rate liberalization is still being deepened constantly.For the banking industry,interest rate liberalization is a "double-edged sword",facing great challenges,but also contains huge development opportunities.Local banks are the main source of capital supply in urban and rural areas,and their development is related to agriculture,rural areas,small and micro enterprises,and local economy.Therefore,it is an important topic worth studying to study the influence of interest rate liberalization on the operation performance of local banks and how local banks should deal with it.In this context,based on the "three characteristics" principle of bank operation,this paper discusses the impact of interest rate liberalization on the operation performance of local banks.The specific ideas are as follows:First,the paper provides theoretical guidance and ideas for reference by combing relevant researches at home and abroad.Secondly,the paper makes a theoretical analysis of the concept of interest rate liberalization and the operation performance of local banks and the relationship between them,which lays a foundation for the logic and empirical analysis behind the paper.Thirdly,the process of liberalization of interest rate is systematically analyzed,and the system is constructed to accurately reflect the degree of liberalization of interest rate.Then,the collected data of local banks are used to make a statistical analysis of their development status,which lays a foundation for the demonstration in the following paper.Finally,27 A-share listed local banks from 2012 to 2021 are used as samples,and the panel data model is established by Stata software.The three dimensions of profitability,security and liquidity of local banks are analyzed by regression,and the systematic impact of interest rate liberalization on the operation performance of local banks is analyzed empirically.Furthermore,the cross-influence of non-interest income on the operation performance of local banks in the process of interest rate liberalization is further discussed.The empirical results show that:first,in the early stage of interest rate liberalization,interest rate liberalization has a positive effect on the operating performance of local banks;However,with the deepening of interest rate liberalization,local banks will experience declining profitability,worsening risks and increasing liquidity,which will have a negative effect on the operating performance of local banks.Second,with the continuous deepening of interest rate liberalization reform,local banks strive to improve their business structure,actively enhance business type innovation,and get rid of the dependence on interest rate spread income,which can promote the improvement of their profit level,but the risk will also increase.On this basis,this paper puts forward some feasible policy suggestions for the development of local banks from the perspectives of government and local banks.On the one hand,the government should not only continue to deepen the reform of interest rate liberalization,but also strengthen the financial supervision of local banks.On the other hand,local banks should increase the proportion of non-interest income,vigorously develop Internet finance business,and strengthen cost efficiency management.