Main Influencing Factors of Interest Rates in China and Empirical Research

This study aims to investigate the influencing factors of interest rates in China, analyzing inflation, liquidity demand, and economic growth as representative variables. Initially, Grey Relational Analysis and Spearman Correlation Analysis were employed to verify the association between these variables and interest rates, revealing a significant impact of the social financing growth rate on interest rates. Furthermore, the Granger Causality Test was utilized to validate the influence of the social financing growth rate on interest rates and distinguish the impact of different economic phases on interest rates. The study also delves into the economic rationale behind interest rates through logical analysis, highlighting that the supply and demand of money are the true determinants of interest rates, with varying sensitivities across different sectors. Finally, the conclusion emphasizes the necessity of considering the financing behaviors of various economic sectors comprehensively when formulating monetary policies and predicting interest rate trends.