Reduction In Interest Rates Research Articles

Effect of Interest Rates on Economic Growth in Bangladesh

The interest rate is the amount of interest paid by a borrower to a lender and is set by the central bank of a certain country. Interest rate is regarded as a key variable affecting savings and investment. The interest rate which is set by the central bank is called the base rate. The base rate affects the aggregate output. Thus, the study examined the effect of interest rates on economic growth in Bangladesh. The study did a literature review to have an overview of what others found regarding the effect of interest rates on economic growth. Based on the findings of the study, it was revealed that interest rates affect economic growth. The reduction of interest rates increases economic growth. If the interest rate is good, it keeps output growth high. The study discovered that low rates of interest help the economy grow since people can get more money to make purchases and invests in businesses, thus spurring economic growth. Access to loans from financial institutions depends on interest rates. A country cannot grow if the cost of borrowing is very high and this is significantly influenced by the interest rates. The study also noted that when the base rate increase, the interest rates from the financial institution also increases. Hence, interest rates affect the economic growth in Bangladesh. High rates tend to reduce the pace of economic development. The research concluded that interest rates should be made at a reasonable rate to spur economic growth. The study recommended that the central bank in Bangladesh, Bangladesh Bank, should develop policies and frameworks that will ensure the interest rates are key as low as possible. The government needs to embrace policies that will aid Bangladesh control interest rates and raise money circulation in the economy. Keywords: Interest Rates, Economic Growth, Bangladesh

Effect of Interest Rate on Loan Repayment in Microfinance Banks in Malaysia

Microfinance banks create employment by giving credit and other financial services, mainly to low-income earners. Thus, the study sought to examine the effect of interest rates on loan repayment in microfinance banks in Malaysia. The study adopted the descriptive research design. The target population included 29 microfinance banks in Kuala Lumpur. The collection of the data was done using a secondary data collection template. The analysis of the data was done using descriptive and inferential statistics. The correlation results indicate that the interest rate is negatively and significantly related to loan repayment (r=-.409, p=.000). According to the regression results, it was discovered that interest rate is negatively and significantly related to loan repayment (β=-0.525, p=0.015). The changes in interest rates have a substantial influence on loan repayment; when the banks charge more, the repayment will be low. Some loans do not perform as anticipated due to inadequate repayment rates, leading to non-performing loans. The study concluded that interest rate is negatively and significantly related to loan repayment. A reduced interest rate will boost loan repayment, and affordable funds concern is essential. One of the most crucial causes of poor bank performance and collapse is high-interest rates, limited quantity offered, absence of entrepreneurship skills and high taxes. The study recommended that financial institution managers need to make the interest rates affordable. The banking institution should extend the repayment period from one year to a minimum of two years or extend weekly deposits to monthly deposits to enhance the payback percentage. Microfinance institutions should scrutinize clients who borrow extensively before the loan is provided. Keywords: Interest rate, loan repayment, microfinance bank, Malaysia

Quantitative Easing, liquidity and Banking Growth; Evidence from Indonesian Banking System

Quantitative easing (QE) is an unconventional monetary policy issued by the central bank to provide economic stimulus in expecting growth of aggregate demand as well as amplifying inflation. This policy typically involves purchasing large-scale financial assets from the open market and it is expected to reduce interest rates and the term structure of the yield which is supposed to have an impact on increasing the distribution of credit to the business (Bowman, Cai, Davies, & Kamin, (2015), Christensen and Krogstrup, (2019). Central banks in developed countries have already utilized the QE policy after the financial crisis hit their countries to ensure financial stability and economic growth. The covid 19 pandemic forced Indonesia Central Bank (BI) to implement a QE policy in early April 2020. The total amount of quantitative easing during this year was IDR 694.87 trillion (in the year 2020) and IDR 505.14 trillion was flooded in the year 2021 (Kebijakan Moneter, 2020). The program was conducted by injection the public fund into the banking system; by purchasing large-scale financial assets such as government bonds as well as other marketable credit securities. Additionally, the BI also reduces the minimum bank reserve that boosts the availability of current account balance to be disbursed in the credit market. Keywords: Indonesian Banks; Lending Growth; Liquidity; Pandemic; Quantitative Easing

Impact of macroeconomic factors on performance of construction industry in Tanzania

Construction industry is crucial for economic development of any country, and Tanzania is no exception. Despite its importance, construction industry suffers from poor performance. This study investigated the impact of macroeconomic factors on performance of construction industry in Tanzania, with the purpose of developing a model which may help policy makers in their endeavor to develop the construction industry. The study adopted longitudinal research design and archival research method. All sources of archival datasets were selected based on judgmental sampling, whereas multiple regression model was employed for data analysis. Inflation rate, interest rate, labour and technology were found to be statistically significant predictors of construction growth. According to empirical results, a unit increase in inflation and interest rates decreases construction growth by 0.106 and 0.354, respectively. Further, an increase in labour and technology increases construction growth by 0.208 and 0.272, respectively. The limitations of this study include the fact that data was limited to official statistics and reports for the period from 1962 to 2020. These statistics exclude informal sector, thus, invariably underestimating output of construction industry. This study recommends reduction of interest rates on bank loans and creating policies to control and stabilize macroeconomic factors within the country.

From systematic to systemic risk among G7 members: Do the stock or real estate markets matter?

Stock and housing market systematic risk may be a critical ingredient in the precipitation of systemic risk and hence a financial crisis. However, surprisingly few studies have so far explored the role of their contagion in triggering systemic risk. In this paper, time-varying connectedness is used to measure two-market systematic risks and time-varying Granger-causality is employed to monitor their causal interactions over time. Using quarterly G7 data over a long period covering 1970–2021, our results indicate that these systematic risks both are very volatile. Moreover, the dominant source of causality in the housing systematic risk implies that policies directed against the possibility of a housing bubble, for example, macroprudential toolkits, deserve special emphasis. Finally, given that the duration of the bilateral causality coincides with those in past crises, a dynamic probit model reveals that adopting an expansionary monetary policy with a huge reduction in interest rates may greatly increase the likelihood of a financial crisis.

Factors Affecting Loan Loss Provisions during the Covid-19 Pandemic – The Case of Commercial Banks in Vietnam

Credit is considered a crucial activity of commercial banks; it accounts for the most significant proportion of the bank's total assets and is also an activity that carries great risks. The study uses OLS, FEM, REM, and FGLS to assess the factors affecting loan loss provisions (LLPs) of 20 Vietnamese commercial banks during the Covid-19 pandemic from Q1/2020 to Q4/2021. The result of the model is based on FGLS to overcome the phenomenon of heteroscedasticity after using estimation by OLS, FEM, REM, showing that the factors affecting LLP of Vietnamese commercial banks during the Covid pandemic include: bank size (SIZE), non-performing loans ratio (NPL), a ratio of pre-tax profit and provision to total assets (CROA), loans to total assets ratio (LOAN), and credit growth (ΔCREDIT). Research results using the FGLS method show that bank size, bad debt ratio, pre-tax profit ratio and provision to total assets and credit growth positively impact the LLP of the Vietnamese commercial banks in the Covid pandemic. However, interestingly, the percentage of loans to total assets can decrease the provision for loan losses. Thereby, the study proposes some policy implications as follows: The SBV needs to have the policy to limit credit growth and bad debt ratio for commercial banks to control the competition for a market share of loans without ensuring the quality of loans, leading to an increase in credit risk and LLP. Furthermore, each Vietnamese commercial bank needs to develop and apply a practical and comprehensive credit process to ensure debt recovery to avoid a lot of bad debts. For new customers, banks need to fully assess all aspects to predict the level of risk before deciding to provide loans. Additionally, the long-term effects of Covid-19 cause difficulties for commercial banks' activities, SBV needs to consider supportive policies through interest rate reduction, grace period, and debt extension to increase financial performance and maintain market share and profits of commercial banks.

SPILLOVERS OF GLOBAL LIQUIDITY AND MONETARY POLICY DIVERGENCE FROM ADVANCED ECONOMIES TO VIETNAM

This paper studies the spillovers of global liquidity and monetary policy divergence from advanced economies to Vietnam. Applying the structural Bayesian Vector Auto-Regressive model with Sims–Zha prior distribution, we find that unconventional monetary policy shocks of major central banks led to a reduction in inflation and short-term interest rate as well as an appreciation of local currency in Vietnam. However, market liquidity provided by surge in the cross-border credit flow led to a temporary upward pressure on inflation, interest and foreign exchange rates. Both types of global liquidity caused an insignificant effect on stock price which evidence the dominance of traditional interest rate and bank-lending over asset price channels in Vietnam. When disintegrating the effects among the monetary shocks from the US, European Union and Japan, the empirical result reveals some evidence of contradictory effects. Accordingly, GDP decreased after Fed’s asset purchase while it slightly increased following the same action from European Central Bank. Quantitative easing shocks also caused a depreciation in USD and Euro, resulting in a decrease in foreign exchange rate but large-scale asset purchase from the Bank of Japan is translated into an upward trend in the exchange rate.

Interpretable deep learning LSTM model for intelligent economic decision-making

For sustainable economic growth, information about economic activities and prospects is critical to decision-makers such as governments, central banks, and financial markets. However, accurate predictions have been challenging due to the complexity and uncertainty of financial and economic systems amid repeated changes in economic environments. This study provides two approaches for better economic prediction and decision-making. We present a deep learning model based on the long short-term memory (LSTM) network architecture to predict economic growth rates and crises by capturing sequential dependencies within the economic cycle. In addition, we provide an interpretable machine learning model that derives economic patterns of growth and crisis through efficient use of the eXplainable AI (XAI) framework. For major G20 countries from 1990 to 2019, our LSTM model outperformed other traditional predictive models, especially in emerging countries. Moreover, in our model, private debt in developed economies and government debt in emerging economies emerged as major factors that limit future economic growth. Regarding the economic impact of COVID-19, we found that sharply reduced interest rates and expansion of government debt increased the probability of a crisis in some emerging economies in the future.

The Importance of Driving the Growth of Small and Medium-Sized Micro Enterprises in DKI Jakarta Province

This study examines factors that affect the growth of MSMEs which include Information Technology, banking credit, human development index, bank interest rates, and inflation on the growth of small and medium-sized micro enterprises (MSMEs) in DKI Jakarta Province. The research method used is explanatory research with quantitative analysis techniques by applying causal statistical models through multiple linear regression analysis and simple regression analysis with a significance level of 5 (five) percent. The data used is secondary data in the form of a time series. The results showed that partially and simultaneously information technology, banking credit, and Human Development Index (HDI), have a positive effect on the development of MSMEs which means that they can increase the development of MSMEs so that they can be done by increasing the factors that affect them, namely information technology, banking credit and HDI. While interest rates and inflation partially and simultaneously negatively affect the development of MSMEs which means to increasing MSMEs must be done to reduce interest rates and inflation. The development of MSMEs has a positive effect simultaneously on the decline in unemployment, this implies that achieving a decrease in unemployment must be done by increasing the development of MSMEs in DKI Jakarta Province.

ANALYSIS OF FINANCING INITIATIVES AND STRATEGIES TOWARDS INDUSTRIAL DEVELOPMENT IN DODOMA CITY, TANZANIA

Purpose: This study was premised on the quest to gain a thoroughly analysis on the financial initiatives and strategies for industrial development in Dodoma City, Tanzania specifically at Kizota Industrial area. The study was directed by three specific objectives namely: to identify the possible sources of financing industrial development, to evaluate the financing initiatives for mobilizing financial resources for development, to examine problems associated with mobilizing financial resources for industrial development in Tanzania.
 Methodology: In this study, the Cross-section design was used which helped in focusing on the analysis of financing initiatives and strategies towards industrial development. In this study, both qualitative data and quantitative data were collected from both primary and secondary sources. The primary sources were employees, banks and industrial owners. Secondary sources were documents, journals, and reports from other researchers. A sample size of 60 respondents was used. The study employed both probability and non-probability sampling techniques. Whereby, under probability sampling stratified sampling was used to pick the respondents, i.e., 54 employees from visited industries. Also, Non-probability sampling technique especially purposive sampling technique was used, whereby a researcher solicited for sources or persons with specific features that are appropriate to the study, hence respondents were purposively selected in accordance to their relevance to the study i.e., 1 bank officer and 5 owners of the industries. Data collections tools like; interview guide, questionnaires, and documentary review were used.
 Findings: The study found out that, the major sources of the industrial development financing are; equity financing, debt financing venture capital and subsidies. The study also found out that promotion of FDIs may be used in financing industrial development. However, the study also noted that there are obstructing factors that hinder access to finance such as high interest rates, weak financial institutions, poor local market, poor corporate governance, poor loan repayment culture, lack of collateral securities. The study also found that poor loan repayment culture possesses a major challenge towards financing industrial development in Tanzania as it creates good sum of non-performing loans.
 Recommendations: The study recommends creation of additional incentives for industrial financing, reducing interest rates, enhancing capital market operations as well as evolving and promoting venture capital are some of the strategies which can be used so as to improve industrial development in Tanzania. Furthermore, banks should come up with financing Packages specifically designed to promote industrial development, and also borrowers should create culture of repaying their loan dues to enhance effective financing for investments and capital expansion towards industrial development in Tanzania.

Evaluation of Manufacturing Sector Performances and its Employment Creation in Nigeria

This study evaluates the performances of manufacturing sector and its effects on employment creation in Nigeria. Historical data relating to performance of some selected sectors of the manufacturing sector of the economy and employment were gathered. Secondary sources (Central Bank of Nigeria (CBN), Nigerian Economic Submit Group (NESG) and Manufacturing Association of Nigeria (MAN)) were explored for data used in this study. Data were analysed using descriptive approach .This study documented that performances of the sector has not been encouraging given its overall percentage contributions to growth of Nigeria economy. Poor performances of manufacturing sector have far-reaching negative effect on the employment generation and standard of living of the people. Therefore, to improve this sector, this study recommends the strengthening of the infrastructures especially energy, transportation, security system, reduction of interest rate and avoidance of imposition of multiple taxes as the major impediments to manufacturing performances in Nigeria.

Sustaining the External Debt of Post-Armed Conflict Countries Reality and Challenges "The Lebanese Case": استدامة الدين الخارجي لدول ما بعد النزاعات المسلحة الواقع والتحديات "الحالة اللبنانيّة"

This research aimed at studying the proposed legal and financial mechanisms to solve the financial crisis that Lebanon is witnessing, while maintaining the economic, financial and monetary strength of the Lebanese state, by relying on the descriptive analytical approach that fits with the nature of the research by collecting data and information on the Lebanese public debt, its sustainability, and its impact on The Lebanese economic and social realities, leading to the most prominent results represented in the countries emerging from armed conflicts asking to contribute to their development and reconstruction, which leads to these countries falling into the trap of indebtedness and financial and political crises. Similar to what happened in the Lebanese case under study, thus staying in the same cycle through the continuity of loan requests and then imposing new extremely difficult conditions aimed at putting pressure on the “debtor” state. Therefore, work must be done to present an integrated recovery plan for the Lebanese economy that works to transform it from a rentier economy into a productive economy, and to work to reduce interest rates in Lebanese banks, whether in local or foreign currencies, and work to encourage and attract private foreign investments by creating an appropriate legal and economic environment, and moving away from for external loans as much as possible.

Relationship between fiscal deficits and unemployment in South Africa

Orientation: Heterodox economic scholarship has challenged the neoclassical doctrine that fiscal deficit increases unemployment in the long-term.Research purpose: This article examined the relationship between fiscal deficits and unemployment.Motivation for the study: The renewed debate about the role of fiscal consolidation in controlling unemployment in South Africa motivated the study. Neoclassicists in South Africa maintain that fiscal consolidation is the solution to unemployment, while heterodox thinkers argue for active fiscal policy.Research approach/design and method: The study utilised the Toda-Yamamoto Granger non-causality test and the Autoregressive Distributed Lag Modelling framework to test the relationship between unemployment and fiscal deficit. The quarterly data for the period 1994–2019 were obtained from the South African Reserve Bank.Main findings: This study found that fiscal deficits reduce unemployment in the short- run but increase it in the long run, thus confirming the neoclassical claim.This study found no statistical evidence for the heterodox view that fiscal deficits reduce interest rates and the neoclassical crowding-out hypothesis. Rather, the interest-neutrality of fiscal deficits was found. The adoption of a fiscal belief system that builds on the expansionary fiscal contraction hypothesis has been associated with high unemployment.Practical/managerial implications: Fiscal authorities have to use fiscal deficits creatively in managing unemployment to create a balanced economy. The fiscal balance, up to a threshold, between 0.8% (surplus) and 1.9% (deficit) of gross domestic product (GDP) in the short term and between 1.7% (deficit) and 1.9% (deficit) in the long term reduces unemployment as per the estimates of the study.Contribution/value-add: The finding that fiscal deficits increase unemployment does not justify a weak fiscal policy stance. The finding that fiscal deficits reduce unemployment up to a point before they begin to increase it in the long-term complements existing literature, which shows that South Africa’s government expenditure to GDP ratio has exceeded its optimal level.

Challenges of Enterprises Optimal Growth in Terms of the Covid-19 Pandemic

Challenges of Enterprises Optimal Growth in Terms of the Covid-19 Pandemic

Monetary policy application and stock market reaction during Covid-19 Pandemic: Evidence from Turkey

We investigate whether the pandemic announcement and three monetary policies changed after that (reducing target interest rate) have an impact on the return, liquidity, and volatility in the Turkish stock market. We find that there is a negative reaction to the pandemic announcement and the announcement of the first decline in interest rates, but we discover a positive reaction to the second and third reduction in interest rates in terms of stock return and liquidity. Moreover, the stock return and liquidity of firms that are listed on the BIST-100 index and have associated derivatives are affected less by the pandemic. Results also suggest that the smallest, illiquid, volatile, and highly searched companies on Google are affected more by the pandemic announcement and the first decline in the interest rate.

COORDINATION OF MONETARY AND FISCAL POLICIES DURING CRISIS

Abstract. The global crisis of 2020, caused by the spread of the COVID-19 coronavirus disease, has led to decline of the Ukrainian economy and contraction in the welfare of society. To overcome the effects of the crisis, the monetary and fiscal authorities have provided strong incentives, primarily to support the most vulnerable social groups and businesses most affected by quarantine restrictions, as well as to facilitate the financial stability of the banking sector. In conditions of limited government resources, to minimizing the negative effects of the crisis requires the highest efficiency of monetary and fiscal policies, which can only be achieved through proper coordination between monetary and fiscal authorities. The present article examines the peculiarities of the conduct and direction of monetary and fiscal policies before crisis processes arose in Ukraine and identifies the factors that constrain the effectiveness of both policies: shadow economy; permanent budget deficit; excessive public debt service costs; the dominance of non-monetary inflation factors in taking monetary policy decisions. Anti-crisis measures of monetary and fiscal authorities are described and analysed. It was determined that the stock exchange channel of money issuance stood inactive during the crisis, which led to a significant imbalance in the interest rate environment in Ukraine and to the increase in the cost of government borrowing in the domestic market, what was caused by poor coordination between monetary and fiscal policies. It has been established that the dominance of the state in the banking system of Ukraine has a negative impact on bank lending during the crisis, and the government’s program to stimulate lending restrains the reduction of interest rates on new loans through market mechanisms. To ensure post-crisis sustainable economic development, the following measures are advised: ensure a gradual reduction in public debt service costs; make the transition to a countercyclical fiscal policy, which will allow for an expansionary monetary policy; implement measures aimed at reducing the concentration of the state in the banking sector and endorse lending to the real sector of the economy rather than government, through state-owned banks; stimulating lending through monetary rather than fiscal mechanisms. Keywords: monetary policy, fiscal policy, monetary-fiscal policy coordination, economic development, central bank, corona crisis, Ukraine. JEL Classіfіcatіon E52, E62, E63, H12 Formulas: 0; fig.: 4; tabl.: 1; bibl.: 37.

СУЧАСНА ДЕПОЗИТНА ПОЛІТИКА БАНКІВ УКРАЇНИ ЯК СКЛАДОВА СИСТЕМИ УПРАВЛІННЯ ПАСИВАМИ

The resilience of the banking system during the war is largely determined by the availability of sufficient sources of funding – own, attracted and borrowed. One such source is bank deposits. The deposit policy of commercial banks in Ukraine has changed significantly in recent years, and banks today have ceased to depend on deposit sources, due to sufficient liquidity of banks due to cheap funds raised from the NBU as refinancing. The main differences in the deposit policy of banks in 2014–2019 and in 2020–2022 are summarized. There is a steady increase in deposits even in times of war, and demand deposits significantly outweigh time deposits, which is due to the desire of customers to have free access to their funds in conditions of uncertainty in the future. The general tendency to increase the deposit portfolio of banks is due to the restoration of confidence in the banking system, as well as the existence of the Deposit Guarantee Fund, which during martial law and three months after its termination will provide full compensation to depositors. Since 2020, we have seen a significant reduction in the level of deposit rates, which today don’t cover inflation. In addition, banks today have no economic reason to raise deposit rates, as the real economy has not had enough facilities to increase lending due to the crisis, the COVID-19 pandemic and especially the war. As an object for investment, deposits today compete with IGLBs, which have higher yields and are not taxed. Today, the main problems associated with attracting deposits in Ukraine are: uncertainty about the future, falling incomes, reduction of interest rates on bank deposits, high level of interest income taxation, significant amounts of cash in circulation, etc. Modernization of banks’ deposit policy should be based on constant analysis of the deposit market, adaptation to the conditions of its operation and the formation of adequate interest rates by banks in order to further invest in the real economy.

ТРАНСФОРМАЦІЯ ЄВРОПЕЙСЬКОГО ДОСВІДУ ЩОДО БАНКІВСЬКОГО КРЕДИТУВАННЯ АГРАРНОГО СЕКТОРА УКРАЇНИ

. The banking sector is the most active participant in Ukraine’s integration process into the EU among other sectors of the economy, as 45% of banking institutions as of the beginning of 2022 have foreign investors in their equity capital structure. The purpose of the article is to study the European experience in lending to the agricultural sector and its implementation in the domestic banking system. In the present conditions, bank lending is an effective source of long-term financing of the economy around the world and the basis for its recovery from the crisis. Russia’s full-scale war against Ukraine has led to a deep crisis that will have far-reaching consequences for the financial sector. However, the banking system successfully resists the challenges of the war. In the process of European integration of the banking system, the cost of credit resources has significantly decreased. Thus, the average interest rates on loans ranged from 20.5% in 2019 to 8.8% in 2021, i.e. there was a significant reduction in the interest rate on loans, which met the requirements of the European integration of the banking system. Instead, in the first half of 2022, the cost of hryvnia loans to business entities grew to 17.9% per annum, the reason for this growth is a significant increase in credit risk due to the full-scale invasion of Russia. The banking system of Ukraine, led by the NBU, is trying to support Ukrainian producers and businesses as a whole. Thus, as of 01.07.2022, the agricultural industry received the largest share of loans, namely 53%, since it is a priority for the Ukrainian economy and guarantees food security to many countries of the world. Due to the limited budget financing of agricultural producers in 2022, bank lending remains one of the main sources of financing for current projects of agricultural enterprises. France and Poland are prominent examples of efficient banking lending programs for the agricultural sector, in particular organic production. The practice of bank lending in the EU countries allows us to make a conclusion about the comprehensive support of agricultural producers from the state and banking institutions, this deserves attention and introduction to the activities of Ukrainian banks. The transformation of European experience in agricultural lending will enable Ukrainian banks to acquire the latest skills in introducing various banking lending programs not only for agricultural producers but also for other economic entities. Attracting European experience into the domestic banking ecosystem will expand the range of banking services for agricultural producers, reduce interest rates on loans, guarantee the availability of credit resources, and provide credit insurance.

Monetary Policy, Redistribution, and Risk Premia

We study the transmission of monetary policy through risk premia in a heterogeneous agent New Keynesian environment. Heterogeneity in households' marginal propensity to take risk (MPR) summarizes differences in portfolio choice on the margin. An unexpected reduction in the nominal interest rate redistributes to households with high MPRs, lowering risk premia and amplifying the stimulus to the real economy. Quantitatively, this mechanism rationalizes the role of news about future excess returns in driving the stock market response to monetary policy shocks and amplifies their real effects by 1.3–1.4 times.

Research on Household Wealth Management Risk Identification and Countermeasures Under the Background of Interest Rate Reduction

In July 2020, the People's Bank of China announced that the transition period of the new rules on capital management would be extended to the end of 2021, so there would be no so-called capital protection and interest protection financial products, and large banks would not be able to use the cost valuation method to evaluate financial products, resulting in continued decline in earnings and principal loss. Secondly, asset transparency is in full swing. On March 10, 2021, in the third session of the fourth Session of the 13th CPPCC National Committee, the committee members' Passage proposed that "the continuity and sustainability of macro policies should be maintained in 2021, and no sharp turn should be made". Since the outbreak, China's monetary policy has been lowering interest rates. The reduction of interest rate directly affects the interest income of people's bank financial management. The future trend of interest rates will directly affect the wealth management of families. In the face of the risks of wealth management, how to maintain and appreciate the existing assets? In the face of the downward interest rate, asset transparency and the reform of the tax system, this paper puts forward wealth management countermeasures for families under this background, and provides guarantee strategies for wealth management, such as the health of the elderly, the marriage of children and the inheritance of wealth.