scholarly journals Interest Rate Liberalization and Commercial Banks Profitability: Evidence from China

2020 ◽  
Vol 12 (5) ◽  
pp. 90
Author(s):  
Lai Ying

Enhanced profitability is an important guarantee to improve the well-being of people and better exert the functions of commercial banks in promoting economic, social and production growth on the premise of the existence and development of commercial banks. Interest rate liberalization is one of the key factors which can affect the profitability of commercial banks. An empirical study is thus carried out on 16 Commercial banks (from 2007 to 2018) to analyze the impact of interest rate liberalization on the profitability of commercial banks. We draw main conclusions from this study: (1) the progress of interest rate liberalization has improved the profitability of banks. (2) This kind of impact is inverted U-shaped, that is, with the advancement of interest rate liberalization, the impact will be reversed in the future. (3) For banks of different sizes, the impact is different. Specifically, small and medium-sized banks are more sensitive to the liberalization of interest rates, while for larger banks, the impact is not strong.

2020 ◽  
Vol 9 (1) ◽  
pp. 34
Author(s):  
Mengting Jiang

<p>The liberalization of interest rate is an important part of the financial reform in China under the current economic situation, and it is the inevitable result of the economic development of China to a certain extent. With the deepening of interest rate liberalization reform in China, commercial banks have been affected to a certain extent; the deposit and loan spread, which accounts for the main income of commercial banks, has been narrowed, and the profit space of commercial banks has been further reduced. Therefore, this paper discusses the impact of interest rate liberalization on commercial banks and the choices that commercial banks should make under this situation.</p>


Author(s):  
Waseem Ahmad Khan ◽  
Abdul Sattar

The core objective of this project is to analyze the impact of interest rates changes on the profitability of commercial banks being operated in Pakistan by examining the financial statements of four major banks during 2008 to 2012. Like the efficiency of banking sector is considered most important for economic growth, monetary policy implementation and macro-economic stability. From the past few years, interest spread of banking sector of Pakistan is rising. As a result variations in the interest rate depress the savings and investment and on the other hand it increases the efficiency of banks’ lending. In this paper interest rate is an independent variable and bank profitability is a dependent variable. To examine the impact of interest rate changes on the profitability of commercial banks in Pakistan, Pearson correlation method is used in this study. As a result it is found that there is strong and positive correlation between interest rate and commercial banks’ profitability. It means if the value of interest rate is increases/decreases then as result value of banks’ profitability will also increases/decreases.


2020 ◽  
Vol 2020 ◽  
pp. 1-11
Author(s):  
Tian Meng ◽  
Mengnan Sun ◽  
Yixuan Zhao ◽  
Bo Zhu

With the advancement of China's interest rate marketization reform, commercial banks' net interest margin has narrowed. This paper selects 16 representative listed banks as the research object and conducts an empirical analysis from the two dimensions: profit level and profit structure. The study finds that the marketization of interest rates promoted the narrowing of net interest margins caused by the narrowing of net interest margins, and the profitability of commercial banks was suppressed. The narrowing of net interest spreads forced commercial banks to actively expand their intermediate business activities and adjust business structure correspondingly. The narrowing of net interest spreads has different impacts on the profitability of commercial banks of different sizes.


2015 ◽  
Vol 3 ◽  
pp. 007-013
Author(s):  
Fidane Spahija

Today’s debate on the interest rate is characterized by three key issues: the interest rate as a phenomenon, the interest rate as a product of factors (dependent variable), and the interest rate as a policy instrument (independent variable). In this article, the variance in interest rates, as the dependent variable, comes in two statistical sizes: the variance and trend. The interest rates include the price of loans and deposits. The analysis of interest rates on deposits and loan is conducted for non-financial corporation and family economy. This study looks into a statistical analysis, to highlight the variance and trends of interest rates for the period 2004-2013, for deposits and loans in commercial banks in Kosovo. The interest rate is observed at various levels. Is it high, medium or low? Does it explain growth trends, keep constant, or reduce? The trend is observed whether commercial banks maintain, reduce, or increase the interest rate in response to the policy that follows the Central Bank of Kosovo. The data obtained will help to determine the impact of interest rate in the service sector, investment, consumption, and unemployment.


2021 ◽  
Vol 4 (5) ◽  
pp. 78-83
Author(s):  
Lina Wang ◽  
Hengyuan Zhao ◽  
Ruoxi Li

In order to explore the influence of interest rate liberalization on profitability, an empirical analysis is carried out with the panel data of commercial banks in China from 2009 to 2019. Then, the heterogeneity of the impact is studied among different banks. The results show that, first, interest rate liberalization and commercial banks’ profitability have an inverted U-shaped relationship, whereby interest rate liberalization would increase the profitability of banks in the early stage but would reduce the profitability after reaching a peak inflection point at the later stage. Secondly, the impact varies among different banks, being more significant in urban commercial banks and large state-owned banks.


2021 ◽  
Vol 342 ◽  
pp. 08003
Author(s):  
George Abuselidze ◽  
Mariam Sharabidze

Based on the role of banking sector in the development of the country’s economy, we consider it important to study the current situation in this sector. The existence of a competitive environment ensures the efficient functioning of the banking sector. The aim of the study is to estimate the competitive environment in the banking sector, to determine the relationship between competition and interest rates. The research is based on the use of different economic models and indexes. Competition in the banking sector is studied on the example of Georgian banking sector, for that we used HHI Net Loans and H-statistic indicators. The study analyses the impact of competition in the banking sector on the net interest income and interest rate in the same sector.


2021 ◽  
Author(s):  
HONG-YU ZHANG ◽  
XIONG-HUI ZHANG

How to survive and develop better in the process of interest rate marketization reform has always been the focus and research direction of financial institutions. In this paper, through the evaluation and calculation of interest rate marketization into an index, sorting out the relevant indicators and data in 2009-2018, using regression model to study the impact of interest rate marketization on the performance of China's top commercial banks.


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