The Research On Pricing Method Of Commercial Bank's Loan Based On Internal Rating-Based Approaches (IRB)

At January 1st, 2004, China Central Bank widened of the floating interest rate spread of loan in commercial banks, and then opened the upper limit of the interest rate of loan at October 29st. So banks owned the self-determination right on loan pricing which they have never had. But nowadays the management on the loan pricing of the national commercial banks is still on an extensive phase. So it is an important and emergency task to enhance the management of loan pricing and determine reasonable loan price.First of all, this essay analyzed the problem of loan pricing in the national bank .Secondly, this essay dissertated the basic principles of loan pricing and discussed the primary factors that influence the loan pricing .Then it introduced and made comment on three traditional loan pricing patterns and chose Price Leadership Model for further research .Thirdly, it presented the difference of three methods in Basel Accord which to estimate the credit-risk .And it attested the fitness of Internal Ratings-Based Foundation Approach to our banks . Then it particularly comprehended the estimation approach of Expected Loss and Unexpected Loss in Foundation Approach. Fourthly, based on that, this essay put forward a loan pricing model in the fundamental of which centralizing the loan risk price, taking into account the bank's profit margin goal and the relationship of bank and customer. Moreover, it selected a case to verify the application of float price in the loan pricing which practice that float price can avoid the market-risk for banks.At last this paper proposes a solution to the banks for perfecting their pricing approach by way of, accumulating data, developing a particular team for loan pricing and constructing the culture of risk management, and etc.