Interest rate policies: loan interest rates are still lower
Current interest rate policy there are two issues requiring further attention: the loans necessary to have continued cuts in interest rates and space. Asymmetry in the rate of interest may be both steady growth and market-oriented reform of interest rates. If the deposit interest rates and narrowing interest difference, you can not only play a role of steady growth, can also contribute to Bank business model transformation, market-oriented interest rate reform will also take a substantive step.
many commentators have noted, the Central Bank cut the benchmark lending and deposit rates, expand the floating range of benchmark deposit rate, that will help strengthen banks pricing and competitive ability of students, is to promote market-oriented interest rate of progress. Benchmark deposit interest rate floating range expansion, asymmetrical if they implement the interest rate adjustment mechanism, it would probably be more balance between steady growth and restructuring of the two goals.
interest rate is the cost of capital, is the pursuit of credit return on investment must be considered the most basic factor, is one of the determinants of investment decisions. Current data show that investment, consumption and export, the three driving forces analysis, ineffective investment demand is the main cause of decline in economic growth. Such as real estate, excess capacity in industry regulation and adjustment of blind investment in some industries, made in real estate, non-ferrous metals industry and the significant decline in railway construction investment, economic growth has slowed.
cut the lending rate release of active investment, steady growth plays an important role. But steady growth needed "stability". How to steady investment? of course not by restoring the ineffective investment demand, promoting the real estate bubble again, releasing excess capacity to steady investment. To create new points of economic growth and increase effective demand, to achieve the goal of steady growth.
in contemporary China, small and medium enterprises are the most direct and effective investment demand. SMEs create jobs more than 80% of total employment level, created the private economy's GDP reached 60% of the total economy. Stabilize the investment needs of small and medium enterprises, is the most important factor for stable economic growth. SME investments has been a perennial problem. In the context of economic downturn, increased risk, enhance SME lending interest rates turned out to be the Bank's risk control of major moves.
in times of economic growth down, the Central Bank reduced a floor on lending rates, lead banks to cut lending rates, is very important to reduce the cost of credit for SMEs. Especially those who need short-term working capital orders processing trade enterprises, supporting parts for a large company needs money to support small and medium enterprises, profit margins are lower but labour-intensive job creation in small and medium enterprises, lower interest rates reduce the cost of capital is the basis of very substantial support. Enterprises have been running money, free production capacity, and to earn a reasonable return on investment. And small business tax relief combined with low credit interest rate, significantly reducing production costs of SMEs, promote effective investment demand of private economy 60% economy, steady growth should be one of the important driving forces.
fall in interest rates is important for stable and effective investment demand of railway construction. Particularly in the relatively backward Central and Western areas of infrastructure, including railway building there is a huge demand for investment in infrastructure. But blindness corrected later to invest in high-speed rail, railway investment gap and the double pressures of debt servicing. Adjust loan interest rates, reducing the pressure of debt of the railway system to increase debt credit, rational distribution through bank financing for railway transport in the Midwest do some groundwork and conducive to attracting private capital to participate in the investment in railway construction. If can has further of policy guide, like in Midwest based facilities construction in the introduced BOT like of investment mode, let civil funds became Midwest based facilities construction of investment funds of main, or will makes Midwest area of effective investment needs rendering more with competitive of pattern, and not completely relies on bank financing, such both can reduced financial system risk, and can achieved civil capital investment around entity economic release effective investment needs of purpose.
credit interest rate less help to promote some of the marginal return on investment company's willingness to invest. Some service industries. Marginal revenue less expansionary investment in investment and without the two sides. Marginal lending rate down to expand the investment returns, helps increase business investment intentions. Especially if the promotion on a number of different levels in the field of supply of service consumption will, increase the guarantee of steady growth in the short term, medium and long term, it will promote the continuous development of the service industry.
lower interest rates also eased the debt risk of local government financing vehicles. Audit Commission data shows that local-government financing platforms of more than 10 trillion bank credit. According to CBRC investigation, with more than 2 trillion not covered, in other words, local-government financing platforms there is great risk of default of about 2 trillion. Lower lending rates, will undoubtedly reduce the coverage of the banking credit repayment pressures, reduced to a certain extent the risk of default. Of course, the ultimate solution to platform risks need more policies, as well as local governments and greater efforts.
no doubt, adjust the benchmark lending rate was "steady growth" of positive measures. However, I think the current interest-rate policy there are two issues that need further attention.
first, the loans necessary to have continued cuts in interest rates and space. 0.25% reduction, for the cost of capital is only a very marginal impact. If accumulated to 1% even greater declines in effectiveness of the release investment demand will be more prominent, steady growth effect will be more pronounced. Furthermore, lending and deposit spreads remained nearly 3%.
Second, the asymmetry in the rate of interest may be both steady growth and market-oriented reform of interest rates. From stability growth of angle see, reduced loan interest rate on promoted effective investment needs of role is very determine of, but also range cut deposits benchmark interest rate, in by negative positive soon of actual interest rate also no completely stable of situation Xia, while is reduced has deposits people of actual income, not conducive to promoted effective consumption needs of further growth, on the this is sacrifice deposits people of interests protection Bank of Lee poor returns of practices, actually is on deposits people of not fair. For banks, spread income policy protection, has no power to implement the necessary management reform and weaken the power of implementing differentiation and foster competition. This to promote interest rate liberalization and optimization of resources allocation function is negative. From this perspective, symmetrical cut deposit and lending rates, neither efficiency nor fairness. Of course, to leave the benchmark deposit rate with 10% space, is a big step forward, banks according to their own savings and return on investment at least, to some extent make different float floating adjustment. Especially in the active "deposit" in the process, which will form a competitive situation, which of course is good for the depositor. But if we don't radically change banks still rely primarily on spread income business model, floating deposit rates may also create new distortions.
to the current situation, I think, asymmetric adjustment of the loan interest rate, if interest rates on deposits unchanged, narrowing the interest differential, you can not only play a role of steady growth, can also push banks to changes in business models, market-oriented interest rate reform will also take a substantive step.


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