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Interest rate liberalisation to banks' risk resistance: moderator of strategic leadership and mediator of monetary policy transmission

Author

Listed:
  • Sze Ting Chen
  • Zi Jing He
  • Kai Yin Allison Haga
  • Yao Jun Fan

Abstract

This paper aims to investigate the influence of two missing aspects and to explore whether the liberalisation has had any influence on commercial banks' risk resistance capacity. This article considers 288 data. The analyses include the Sobel test, the ADF stationarity test, and the VAR model co-integration test. Our results show that China's interest rate marketisation reform has a positive effect on reducing bank risk. Commercial bank anti-risk capabilities can improve both China's monetary policy transmission and strategic leadership capabilities. This article showing that appropriate laws and regulations should be strengthened to reduce the risk of bankruptcy that commercial banks may face as a consequence of interest rate liberalisation. This paper contributes to the theory of interest rate liberalisation and anti-risk capability, by conceptualising from strategic leadership and monetary policy transmission theory. It finds that market-oriented rate reform has increased interest rate risk.

Suggested Citation

  • Sze Ting Chen & Zi Jing He & Kai Yin Allison Haga & Yao Jun Fan, 2023. "Interest rate liberalisation to banks' risk resistance: moderator of strategic leadership and mediator of monetary policy transmission," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 25(2), pages 173-209.
    • Handle: RePEc:ids:ijecbr:v:25:y:2023:i:2:p:173-209
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