Household Savings Impact of Interest Rate Liberalization from the Perspective of Bank WMPs

This chapter collects information about bank wealth management products (WMPs) in China from 2006 to 2012, classifies such information into annual panel data of 31 provinces, and examines the household savings impact of bank WMP yield after controlling of some important variables. Our empirical results indicate a significantly negative correlation between WMP yield and household savings, and the negative correlation is more significant for products with shorter maturities. Based on the reality that WMPs follow the currency market as pricing reference, we may draw the following conclusion: China’s current interest rate liberalization has been steadily advanced in the form of WMPs through the vehicle of the currency market.