Research On Loan-Pricing Of Commercial-Bank In China

Loan is a traditional business of the commercial bank. For most commercial banks, loan asset could overweigh half of their whole asset, and bring an interest and fee income about 50%-60% of the whole commercial bank income. What's more, there are more and more new products of financial innovation related to loan business, including loan securitization, loan sales and other credit derivatives. Therefore, whether the loan price reasonable or not becomes the key to all the bank business related to loan.Domestic commercial banks lack of experience of asset pricing due to their reckoning on the prices made by People's Bank for over fifty years. On 2004-10-29, People's Bank declared that domestic commercial banks themselves could make the loan price. Since then, commercial banks have the right to make the loan price on the basis of basic rate declared by the People's Bank. So the loan pricing of domestic commercial bank is on the way from the-same-price to differentiate-price. Finding the proper method to making the loan price is the key.There are three mature models for loan pricing, including Cost Plus Model, Price Leadership Model, and Customer Profitability Analysis model. Each of them has its own advantages and disadvantages. Therefore, we could not replace one with another. But we could combine one with another to avoid their disadvantages and advocate their advantages. Domestic commercial banks could try a new way of loan pricing which is combined three models together according to the state in quo and problems of domestic commercial banks. In concrete, the loan price is made up of five parts, including inner capital transmitting price, working fee rate for certain loan, default risk compensation rate, goal profit rate of the commercial bank, rate adjusted extent. And the default risk compensation rate could be made by measuring default risk in data way through KMV model; rate adjusted extent could be made by the customer's contribution to the bank. In order to make this model more effective, the commercial bank should perfect its loan pricing system, such as turning service ideal, forming reasonable inner capital transmitting system, and perfecting inner risk evaluation system.