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Research Paper | Economics & Management | China | Volume 8 Issue 7, July 2019 | Rating: 6.4 / 10

Research on the Impact of Interest Rate Marketization on Risk Bearing of Commercial Banks

Li Chaonan

Abstract: Based on the elaborating of the interest rate marketization process and the risk influencing factors, this paper empirically studies the impact of interest rate marketization on risk-taking. In this paper, 30 banks including state-owned banks, joint-stock banks and city commercial banks are selected as samples. Using the micro-data of 130 commercial banks in China from 2004 to 2015, the dynamic panel model by System GMM Estimation is analyzed by regression analysis. The study shows that the liberalization of loan interest rate decreases the banks? risk-taking, and the liberalization of deposit interest rate increases the bank's risk-taking. Overall, it shows a downward trend and then a rising trend. Bank risk is negatively related to the size of assets and return on assets; and it negatively related to economic growth and positively related to monetary policy. Finally, from the perspective of banks and regulators, this paper proposes suggestions to copy with the risk of interest rate liberalization.

Keywords: Interest rate liberalization, Risk-taking, Dynamic panel model, GMM

Edition: Volume 8 Issue 7, July 2019,

Pages: 1545 - 1550