Open AccessResearch on the Influence of Interest Rate Liberalization on Commercial Banks’ Profitability in China
Author(s) -
Lina Wang,
Hengyuan Zhao,
Ruoxi Li
Publication year - 2021
Publication title -
proceedings of business and economic studies
Language(s) - English
Resource type - Journals
eISSN - 2209-265X
pISSN - 2209-2641
DOI - 10.26689/pbes.v4i5.2647
Subject(s) - profitability index , liberalization , interest rate , panel data , china , business , monetary economics , net interest income , commercial bank , financial system , economics , finance , market economy , econometrics , political science , law
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.