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Research Paper | Economics & Management | China | Volume 6 Issue 9, September 2017

The Impact of Interest Rate Liberalization on Chinese Commercial Banks

Liu Xiaotong

Abstract: Interest rate liberalization is a major reform for China's financial market, which now has entered the final stage-deposit interest rate liberalization, the success of this step will mark the end of interest rate liberalization reform in our country. In this paper, we first introduce the process of interest rate liberalization and the present situation in our country, then analysis the impact of interest rate liberalization which bring to China's commercial Banks, promote the reform of commercial banks, accelerate financial innovation, optimize the customer structure, standardize the external environment, conducive to the fair competition among commercial banks. But there are also some adverse effects, increase the interest rate risk and management risk, increase the pressure of competition between the industry, reduce banks' earnings, the impact on traditional business, put forward new requirements for banks' pricing ability, financial corruption, turmoil in the financial system. Finally draw lessons from the international experience of interest rate liberalization, introduces the concrete measures which should be taken in response to China's interest rate liberalization, strengthen the development of intermediate business, improve the pricing ability of commercial banks, enhance financial innovation, guard against interest rate risk, deepen reform of the system, form a good credit risk management mechanism, and pay attention to personnel training.

Keywords: Interest rate liberalization, Commercial Bank, Opportunity, Challenge, Strategy

Edition: Volume 6 Issue 9, September 2017,

Pages: 897 - 904

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