Loan Pricing Of Commercial Bank In China

With the development of market economy, especially entering WTO, commercial banks gain great process in reform, but still have many problems, loan pricing is just one of them. Loan pricing plays a key role in the marketing and competition of commercial banks, and contributes greatly to banks to develop the market, to improve the profit and to strengthen the customer's loyalty.The main purpose of this article is to suggest a theoretical support for our banks to improve loan pricing. Firstly, the author discusses the loan pricing theory, this means credit rationing, converse selection and inspirit effect, etc. Second, the author deals with the methods of loan pricing in foreign countries and in China. Return of risk adjusted asset, leading pricing, and price return analysis are three main methods in western banks. Loan cost pricing, relation pricing and market reference pricing are three main methods in our banks. Of course they are rather different. The author emphasizes problems of loan pricing in our banks, namely, the interest rate is less elastic, pricing terms and the structure are not suitable, etc. At last, the author not only gives suggestion about improve the loan pricing in our banks, such as construction of management system of internal loan pricing, promotion of innovation, and encouragement of fair environment of competition etc. but also specifies the details to compute the loan, which is rather complicate.