(Data Picture) A private lending service center in Wenzhou, Zhejiang.

Figure/Zhongxin

The road to marketization of loan interest rates

  "China News Weekly" reporter / He Bin

  Published in the 963th issue of China News Weekly on September 7, 2020

  "The proportion of private enterprise financing in the total financing volume, we think is within a reasonable range, or within a reasonable range. It can also be said that from the perspective of total financing volume, the problem of financing difficulties for private enterprises does not exist. "Said Liu Xiaochun, vice president of the Shanghai New Finance Research Institute.

  On August 30, the "2020·Jingshan Report" hosted by the China Financial Forty Forum (CF40) and led by CF40 senior researcher Xiao Gang was officially released, with the theme of "Economic and Financial Development and Policy Research in the "14th Five-Year" Period "This is also the fourth consecutive year that CF40 has released the "Jingshan Report".

  This report conducts a systematic study of major economic and financial issues during the "14th Five-Year Plan" period and proposes policies from the perspectives of taking advantage of the ultra-large-scale market, changes in savings rates, wide currency and low interest rates, financial support for the development of private enterprises, real estate finance, and financial risk prevention. Suggest.

  Among them, Liu Xiaochun is responsible for "building a long-term mechanism for financial support for the development of private enterprises."

Generally speaking, the financing dilemma of private enterprises is often summarized as "financing is difficult and expensive."

Liu Xiaochun believes that “difficult” and “expensive” need to be considered separately. The former is a question of the availability of financing, and the latter is a question of the price of financing.

To solve these two problems at the same time, there is a certain contradiction, allowing "expensive", and financial institutions risk pricing to cover the cost, which will better solve the "difficult".

  "Private enterprises' financing is difficult and expensive to finance," which is mainly reflected in the difficulty of refinancing on the basis of high leverage, the complex financing process and the relatively high financing cost. We believe this is a market phenomenon, which is an interaction between market participants and market rules the result of."

  The imbalance between supply and demand under the loan "indicator"

  In order to solve the problem of financing difficulties and expensive financing for small and micro enterprises, the regulatory authorities have proposed to banks "three no less than" (the growth rate of loans for small and micro enterprises, the number of households and the rate of obtaining loans not lower than the previous year), " "Two increases and two controls" (the year-on-year growth rate of loans to small and micro enterprises shall not be lower than the year-on-year growth rate of various loans, the number of loan households shall not be lower than the level of the same period of the previous year, and reasonable control of the asset quality level and comprehensive cost of loans for small and micro enterprises)

  The government work report in the past two years has put forward quantitative indicators for the growth rate of loans to small and micro enterprises. In 2019, large state-owned commercial banks are required to increase loans to small and micro enterprises by more than 30%. In 2020, large commercial banks are required to inclusive small and micro enterprises. The loan growth rate is higher than 40%.

  In Liu Xiaochun's view, the positive side of these measures is that they have effectively alleviated the financing difficulties and expensive financing of small and micro enterprises, but they have also led to distortions in the pricing system to a certain extent, and the principle of risk pricing cannot be fully implemented.

The data shows that the average interest rate of new inclusive small and micro enterprise loans issued by the five large banks in the first half of 2020 is 4.27%, which is 0.43 percentage points lower than the average interest rate for the whole year of 2019, and is already lower than the loan interest rates of some large and medium-sized enterprises.

  In actual operation, some banks also lend to "relevant accounts" and then on-lending out. Small and medium-sized enterprises have not received low-interest loans.

In this regard, Liu Xiaochun believes that to some extent, the bank is responsible for depositors.

"We must never forget that the bank lends money by absorbing savings deposits, so he must first be responsible for savings deposits."

  "The problem now is that when banks are given specific loan targets for specific loan targets, the banks themselves lack market choice. They cannot find a loan target that meets the loan requirements and can only find those that are'safe' and assured. "Enterprises." Liu Xiaochun told China News Weekly that because these companies can recover their principal and interest, in order to ensure the safety of savings.

"So, the current contradiction is that banks cannot find good assets, good companies, and the effective demand for loans is insufficient."

  From an economic perspective, effective demand refers to demand that has the ability to pay. "For example, if we say that there will be demand when we are hungry, but if we don’t have money to buy food, it cannot be regarded as effective demand. From a credit perspective, the same is true, effective demand It refers to the demand for the ability to repay, so the bank has to increase the number of loans and can only give it to companies with the ability to repay." Liu Xiaochun believes that as long as the government does not interfere with bank lending behavior, the bank will determine its strategic positioning, and The customer group under this strategic positioning, and to support the customer group, will have better market regulation effect.

In this process, the government should not interfere too much as long as it does not violate regulatory requirements and legal provisions.

  In this year's "Jingshan Report", Liu Xiaochun's team pointed out that to solve the long-term financing mechanism of private enterprises, we cannot simply look for the cause from the supply side, but should analyze it from both the supply side and the demand side.

The external environment such as public policies and sudden crises will also have an impact on the operation and financing of private enterprises.

  “Of course, the country hopes that more financing will be tilted towards production-oriented enterprises. With the improvement of production capacity, it will be able to create jobs and create benefits, but in fact there is not so much effective demand now.” Liu Xiaochun said.

  Does it regulate the market or intervene in the market?

  Recently, the Supreme Law issued the newly revised "Regulations on Several Issues Concerning the Application of Law in the Trial of Private Lending Cases", which canceled the concept of "two lines and three areas" in the 2015 version, which is divided by two interest rate dividing lines of 24% and 36%. In the three areas of invalid area, judicial protection area and natural debt area, 4 times of the 1-year loan market quote rate (LPR) is used as the upper limit of judicial protection of private lending interest rate.

  According to the explanation of He Xiaorong, a full-time member of the Judicial Committee of the Supreme People’s Court, this move aims to significantly reduce the upper limit of private lending interest rate protection, promote financial and private capital to serve the real economy, relieve corporate financing difficulties and high financing, and prevent "routine loans from the source." ""False loans".

  Regarding this judicial interpretation, there is a view that this is the control of interest rates by the Supreme Law through the legal level, while interest rates were controlled by the central bank before.

  In this regard, Liu Xiaochun believes that everyone may have misunderstood the issue of the upper limit of judicial protection. "I do not think that the judicial interpretation of the Supreme Court is interest rate control. It only sets the upper limit of judicial protection for private lending interest rates, and does not specify the upper limit of interest rates. "Liu Xiaochun gives an example. For example, two people have a loan relationship, as a private loan, they agree to charge 30% of interest, which exceeds the current judicial protection limit, but as long as both parties are willing, it is also possible.

  Moreover, in Liu Xiaochun's view, this judicial interpretation only changed the calculation method of the judicial protection ceiling, or the method of linking, rather than simply lowering the protection ceiling.

"In other words, if the LPR goes up, the upper limit of judicial protection will inevitably go up, so it is a question of calculation method. As to whether the result of this calculation method is reasonable, that is another way to say."

  Liu Xiaochun emphasized that the judicial interpretation stipulates that licensed financial institutions do not apply this bill, but the understanding of licensed financial institutions may require interpretation by relevant departments.

In addition, this judicial interpretation does not deny the problem of marketization. It is nothing more than setting a maximum limit on the judicial protection of interest rates in the field of private lending, but it does not limit the interest rate of private lending.

In addition, the financial institutions themselves are still regulated by the regulatory authorities, which means that the marketization of interest rates is still promoted by the regulatory authorities, and the law will not interfere.

  "Recently, we have noticed some voices of opposition. I think some voices may not really support small and micro enterprises. Because we also mentioned in our report just now that the financing of small and medium-sized enterprises comes from bank loans and some private financing. Including some small loan companies." Liu Xiaochun said.

  In addition, private loans and even usury will be used. There are two main situations. One is that when bank loans are due and need to be repaid and re-borrowed, private loans may be used to transition, because of supervision The policy stipulates that the new cannot be borrowed to repay the old, nor can it be extended indefinitely. Enterprises must first repay the due loans before refinancing. This involves the problem of turnover, and some enterprises can only solve the problem of private loans.

Many small loan companies are actually doing this business now.

The other is that the business itself does have problems. If you are desperate, you can only borrow usury. In the end, the business may go bankrupt.

  In addition, some people believe that the upper limit of judicial protection for private lending may be too low, which may cause some private lending to go underground and become a gray area.

Liu Xiaochun believes that this was originally a false proposition. In the past, private lending was not allowed to have problems above and below ground; now that private lending is allowed, as long as it is legal, then there is no concept of above and below ground. Those so-called underground are what the judicial interpretation says. Illegal borrowing is not within the scope of our discussion.

  From the perspective of the lender, whether it is small loan companies, loans between relatives and friends, and some usurers who specialize in lending as their business method, as long as they use lending as a business method and are not licensed, it is illegal to borrow.

Therefore, over the past two years, the regulatory authorities have been emphasizing that financial services must be licensed.

Illegal lending is not protected by justice, and should even be banned.

Therefore, in Liu Xiaochun's view, this statement is actually looking for reasons for those who operate loans without a license.

  Does the market set interest rates or does the government control interest rates?

  In November 2014, the central bank announced a reduction in the benchmark interest rates for deposits and loans. The official website of the central bank stated that the purpose of the interest rate cut is “to give play to the guiding role of benchmark interest rates, to bring real interest rates back to a reasonable level, and to work to alleviate the outstanding problem of high corporate financing costs”.

  But the result was unexpected. After the interest rate cut policy was announced, the bill direct discount interest rate rose instead of falling. The inter-bank 7-day repurchase interest rate also rose slightly from before the interest rate cut. The bond market’s national debt and credit bond yields rose across the board, and the interest rate cut ignited The enthusiasm of the market to invest in the stock market, a large amount of funds poured into the stock market from all sides, the stock market rose sharply, contrary to the central bank's intention to cut interest rates to stimulate the real economy.

  Some people in the industry believe that under the premise that there is no substantial change in the relationship between the supply and demand of funds, regardless of the nominal interest rate, the interest rate cut policy will not reduce the actual financing costs of SMEs, but will increase the difficulty of financing.

  It is worth noting that the central bank has been committed to the market-oriented reform of interest rates in recent years, but hopes to reduce the benchmark interest rate to solve the problem of financing difficulties in the real economy. Under the general trend of interest rate market-oriented reforms, should the regulation of interest rates trigger the market? dispute.

  In Liu Xiaochun’s view, marketization itself is a process. In the process of interest rate marketization, China has always been concerned about the risks of foreign countries in the process of interest rate marketization, including the risk of fluctuations in economic development due to interest rate marketization and financial institutions themselves. Risks arising from the marketization of interest rates.

  However, the market includes both the supply side and the demand side, as well as market rules. "We cannot exclude policies, regulations, and government management. We must speak abstractly about the market. Therefore, in specific practice, marketization does not require market management, but market management No matter how you manage it, every country is different. The Fed will also adjust interest rates as a means of macro-control, not just letting the market go.

  "In theory, there is a self-regulating market, but in reality, the market will not always go in the direction of good. There will always be a pull. The final equilibrium may depend on disasters, crises, and economic crises. A typical adjustment." Liu Xiaochun said.

However, by relying solely on crisis adjustment to achieve market equilibrium, many people will be ruined, suffered losses, the economy will suffer greater harm, and even cause social unrest. Therefore, the government or regulatory agencies must make adjustments. Set it over.

"Of course, how to specify policies and regulations, and how to manipulate government behavior is very worth studying."

  In fact, all countries were looking for this point before, including the Taiwan area, including the United States, Japan, South Korea and other countries. At that time, they were all liberalized when interest rates rose, resulting in high interest rates for deposits and disorderly competition.

"High-interest deposits will inevitably bring high-interest loans, which on the contrary poses great risks to the economy. Under the competition of high-interest loans, risk requirements are often reduced, asset quality is not high, and a lot of thunderstorms, so this is our interest rate What needs to be avoided in the process of marketization."

  China's interest rate market reform has been underway for several years. On July 20, 2013, the central bank decided to fully deregulate the lending rate of financial institutions.

On May 11, 2015, the Central Bank decided to adjust the upper limit of the floating range of deposit interest rates for financial institutions from 1.3 times the benchmark deposit interest rate to 1.5 times.

On August 26 of the same year, the Central Bank decided to loosen the upper limit of interest rate fluctuations for time deposits with a maturity of more than one year (excluding one-year maturity), and China's interest rate market reform has taken another important step forward.

On October 24, the Central Bank decided not to set floating ceilings on deposit interest rates for commercial banks and rural cooperative financial institutions.

  After 2015, the reform of interest rate marketization has not made great progress. Until August 17, 2019, the central bank issued an announcement on reforming and improving the formation mechanism of loan market quote interest rate (LPR), in terms of quotation principles, formation methods, term types, and quotations. LPR is reformed in six aspects, including bank, quotation frequency and application requirements.

On the basis of the original 10 national banks, 2 urban commercial banks, rural commercial banks, foreign banks and private banks will be added, and the number will be expanded to 18.

  For a long time, banks have issued loans to customers, and the interest rate has been determined in the form of "increase × × times" and "× × discount" in accordance with the benchmark loan interest rate announced by the central bank.

LPR is a basic loan that is calculated and announced by the National Interbank Funding Center authorized by the People’s Bank of China by a representative quoting bank based on the bank’s loan interest rate to the highest quality customers. Reference interest rate.

After the implementation of the LPR reform in July 2019, when banks issue loans, the interest rate will be determined in the form of "LPR ± × × basis points" (1 basis point = 0.01%), or "LPR ± × ×%".

  According to the latest announcement issued by the National Interbank Funding Center, the 1-year and 5-year LPRs on August 20, 2020 were 3.85% and 4.65%, respectively.

  In Liu Xiaochun's view, the starting point for the implementation of LPR is also the starting point for China's economy to enter a special period.

That is to say, the old and new momentum is changing, and the economy is going down, especially in the case of the Sino-US trade war and falling international demand. The entire country and society hope that financing costs will be reduced.

  "From the perspective of financing costs, the effect of interest rate marketization is good, but how to evaluate this system requires several fluctuations in interest rates." Liu Xiaochun believes that the current interest rate is mainly in the downward process. It has not reached the volatility stage of rising interest rates, and only after experiencing one or two ups and downs, can it be said that interest rate marketization has reached normal.

  Liu Xiaochun expressed his appreciation for the professionalism of the People’s Bank of China in the reform of interest rate marketization, and believed that the market should be allowed to speak on the premise of maintaining the basic stability and reasonable abundance of market liquidity. This includes interest rates, and interest rates themselves are also regulating the market. Supply and demand, "but the marketization of interest rates does not mean that interest rates themselves do not need to be adjusted. LPR still needs to be adjusted. This is a means of macro-control."

  Speaking of the goal of final interest rate marketization, Liu Xiaochun believes that it does not lie in the marketization of interest rates itself, but actually lies in the reform of the entire Chinese market, which is the "Let the market play a decisive role in resource allocation" proposed by the Third Plenary Session of the 18th Central Committee. , This pushes forward further.

  In Liu Xiaochun's view, in the process of market allocation of resources, market players, whether private or state-owned enterprises, will fail.

Banks can’t extend loans that shouldn’t be extended, thus weeding out backward ones and supporting competitive ones. Under this circumstance, Chinese companies will form a strong international market only when they build a dual-cycle pattern dominated by domestic large cycles. Competitiveness.

  China News Weekly, Issue 33, 2020

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