ABSTRACT
A large number of papers have examined the effects of interest rate liberalization on economic and financial development, but there have been few systematic studies about the impacts of the latter on interest rate liberalization. A considerable number of empirical studies have also indicated that the impacts of different stages of economic development on the interest rate system and on the degree of interest rate liberalization were significant. The main developed countries enacted a series of wide-ranging financial reforms such as interest rate liberalization to adapt to the changes. The exchange rate policy should also be supportive to maintain the steady growth of exports, which will affect the interest rate reform and policy. The dilemma of the interest rate policy will also influence the time choice for launching the deposit and lending rates reform. International experience shows that interest rate liberalization and financial innovation are always of mutual promotion and reciprocal causation.
