Interest rate liberalization is“Interest rate control”Symmetry is that the state deregulates the interest rate, which is determined by the capital supply and demand parties in the financial market according to the market capital supply and demand situation and their own capital demand and other factorsinterest rateact.This kind of behavior, which is not controlled by the government but determined by the market, is interest rate liberalization.It means that the government has relaxed the interest rate control, and the commercial banks decide the interest rate by themselves according to the capital demand in the market and the risk degree of the loan project, and distinguish different risks through interest rate differenceslender。
Interest rate liberalization meansFinancial supervision authorityCancel the establishment of financial institutionsinterest rateLimitInterest rate levelIt is determined by the capital supply and demand of the market.Interest rate liberalization hopes to increase the flexibility of interest rates and other asset prices, reduce and redistributeInterest rate controlBroughtQuasi rent?Optimize credit allocation and increase the competitiveness of the entire financial services industry.After interest rate liberalization, commercial banks have more interest rate autonomy.Commercial banks can distinguish different risks through interest rate differenceslenderHigh risk loansinterestCompensation, but for the implementation offinancial liberalizationOfdeveloping countryIn terms of financial market risks, the liberalization of interest rates has increased.
First, quasi rentAnd creditThe cancellation of rationing increases the risk of financial markets.Before financial liberalization, the government adoptedCredit rationingControl the price of credit in the market atMarket clearing priceTo enable borrowers who have access to credit to obtainQuasi rent。Due to the existence of market demand for creditInformation Asymmetry Therefore, the government can only achieve the so-called balance of the market through credit rationing.However, the liberalization of interest rates, the abolition of the ceiling on interest rates, allowing interest rates to rise, and the reduction of credit rationing and quasi rents are actuallyDomestic creditA reassignment of.Depressed after interest rate liberalizationNominal interest rateIt will rise, sometimes very high.Those who obtained credit under the past system also had to pay higherBorrowing rateAnd lost the quasi rent.Especially those who rely heavily oninterest rateThe borrower of quasi rent will face the risk of bankruptcy at this time.The change of interest rate and the cancellation of credit rationing after the liberalization of interest rate will affect the financial market borrowers andlenderHave had an impact.Although thoseLong term borrowingsBecause infinancial liberalizationThe interest rate of the loan contract signed with the bank before is fixed and less affected by interest rate liberalizationShort term borrowingsOfMarket interest rateWe have to acceptFloating interest rateTherefore, it will also be affected by interest rate liberalization.In addition, lenders will also face the same situation: if they use short-term loans to fund long-term fixed interest rate loans, their original profit expectations will be squeezed out.Quasi rentAnd the cancellation of credit rationingfinancial intermediaries Institutions also have an impact.Because financial intermediaries used to benefit fromDeposit interest rateThey may also be unable to bear the burden of rising interest rates.After interest rate liberalization, banks can use differentinterest rateTo treat different riskslender。However, those seemingly expected profits are often lost due to the loss of a loan.After the liberalization of interest rates, the government has to repay and inject capital into domestic borrowers at new interest rates, which will undoubtedly aggravate the government's budget deficit.The removal of interest rate restrictions has deprived the government ofInterest rate controlTo obtain quasi rent, which will undoubtedly increaseMacroeconomyAnd instability.The liberalization of interest rates has imposed market discipline on the government, which mustMarket interest rateTo borrow money.Therefore, the removal of domestic credit control willdeveloping countryDomesticbudgetDeterioration.secondly,Change in interest rateUncertainty.After the liberalization of interest rates, interest rates have risen and become volatile.To some extent, this volatility of interest rates is precisely the result of past repressionMarket clearingThe release of interest rate also reflects the variability of the variables that determine interest rate and the instability of people's expectations;Especially when domesticinterest rateWhen linked with the exchange rate, the volatility of interest rate is more obvious.
After the liberalization of interest rates, the uncertainty of interest rate changes first makes it impossible for financial market participants to accurately predict changes in interest rates,Interest rate riskenlarge.Before the 1980s, the failure of most banks was due to the wrong prediction of interest rates.Secondly, the volatility of interest rates has increased the difficulty in implementing financial market contracts.Although the loan and loan contract after the free interest rate can beFixed interest rateChange toFloating interest rateHowever, frequent changes in interest rates have a negative impact on the borrower andlenderWill generate risks, and the borrower cannot predictLoan costAnd lenders are unable to estimate their ownInterest income。This undoubtedly increases the transaction cost of the market as a whole and increases the risk of the financial market.After the liberalization of interest ratesdeveloping countryWith floating exchange rate, the exchange rate will also change constantly, and the change of exchange rate will in turn affect the domesticInterest rate levelChanges.interest rate, exchange rate, etcChange rangeThe increase of has aggravated the instability of the financial market.With the increase of liquidity, asset conversion will be easier, and the sensitivity of interest rate and exchange rate fluctuations will be greatly improved.But the long-term survival in the regulated environmentfinancial structure Often cannot adapt to this change.
Credit expansion.After interest rate liberalization, the government canceledCredit controlThe credit autonomy of financial institutions has expanded, and the government has cancelled the high reserves of commercial banks, which has led to a large increase in bank deposits and a large inflow of foreign capital.In order to seize the market share after interest rate liberalization, financial institutions inevitably have credit expansion.Banks and banks in five East Asian countries: Indonesia, South Korea, Malaysia, Thailand and the PhilippinesNon bank financial institutionsA large amount of loan has led to credit expansion for the private sector.During 1989-92 in Indonesia and 1993-1996 in Thailand, the annual credit growth was more than 25%.Indonesia, Malaysia, Philippines and Thailand are implementingfinancial liberalizationIn the post capital inflow period, the domestic credit growth rate is more than 1.5 times the annual GDP growth rate.With such rapid credit expansion, it is urgent for the bank to have a lot of manpower and technology to assess the risks of borrowers and projects.Obviously, it is difficult for the bank to do this at the momentcredit risksUndoubtedly increased.Due to credit expansion, banks and non bank financial institutions are extremely vulnerable to the impact on the economy.Loans from financial institutionsTo those sectors and enterprises whose debt repayment ability is vulnerable to economic shocks, so as to weaken their ability to resist economic turbulence. If these sectors and enterprises have difficulties in repayment, it will worsen the currency and term matching risk of financial institutions,Non performing assetsThe proportion will increase.
Bank andNon bank financial institutionsThe departments and enterprises that lend a large amount of funds areestateAnd the bond industry, so thatbankingThe risk is exposed to the real estate industry and securities industry.In the 1990s, Indonesia, Thailand and MalaysiaReal estate loansIt accounts for more than 16% of the bank's total assets.As we all know, the real estate industry and the securities industry are extremely vulnerable to macroeconomic fluctuations, and they are the most sensitive to the economy.Once the economy shows signs of instability, the real estate industry and the securities industry will be affected first.Therefore, thesecredit risk extremely.
Fourth,interest rateSharp rise.becauseMarket clearingThe interest rate has been artificially lowered for a long time. Once interest rate liberalization is implemented, a country'sInterest rate levelThey usually improve.After the implementation of interest rate freedomNominal interest rateFor countries and regions with average data, the ratio of countries with rising interest rates and those with falling interest rates is 3:1;It can be obtained completely atEffective interest rateAmong the 18 countries in the data, only Poland has sharply decreased its real interest rate after implementing this policy, and the other 17 countries and regions have increased to varying degrees.
Main impacts
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interest rateThe sharp rise of has brought a series of negative effects to the economy.Under the condition that the interest rate remains unchanged, all kinds of enterprises can generally repay their debts smoothly;Once the interest rate rises, the enterprise'sInterest expenseIncrease, only enterprises with good performance can repay on time, while most enterprises will face difficulties.along withEffective interest rateWith the increase of, borrowers who prefer risk will become more customers of banks, resulting in“adverse choice”The original risk averse compensatory corporate borrowers also tend to change the nature of their projects to have a high level of risk and income, which produces a "risk incentive effect".becauseInformation Asymmetry , due to the increase of interest ratecredit market "Adverse selection" occurs, and because the changed interest rate stimulates enterprises to use funds for high-risk activitiesmoral risk Question.A higher interest rate means that enterprises are more likely to default on loans, and the bank's income will be lost.
In short, after the liberalization of interest rates,interest rateThe sharp rise in the number of banks has led banks to take high risks in pursuit of high profits.Iffinancial liberalizationIn the later environment, the financial supervision system is not perfect, and the domestic legal order is relatively poorMoral qualityUnder poor conditions, interest rate liberalization will increase the vulnerability of banks, and in serious cases, it will break outfinancial crisis。Therefore, it is necessary for us to strengthen the risk prevention and research in the process of interest rate liberalization.
Edward Shaw believes that "financial shortness is, to a certain extentfinancial assetsOfReal rate of return（interest rate）And believes that "the essence of financial liberalization is relaxationEffective interest rate", that is, the interest rate is controlled bymarket mechanismdecision.From the practice of various countries, the marketization of interest rates is the central link of financial liberalization reform, and most of them are relaxedInterest rate controlAs a wholeFinancial reformThe leader of.
(2) Marketization of interest rates is often associated with other measures of domestic financial liberalization
