A Study Of Loan Pricing In Chinese Commercial Banks

The interest rate is one of elementary variables which financial system reformation involved in,because it is the basic price index of financial market. The People's Bank of China had regulated interest rate on 29 Oct.2004 and one of important policies cancelled the limit of loan's upper rate. Commercial banks can price their produces by themselves basing on the risk. With the development of interest rate marketization, on the one hand, it qualifies the commercial banks to decide on interest rate, this contributes greatly to banks to manage the produces, to develop the market, to fractionize the market and to enhance the competition of commercial banks; on the other hand, new challenge is coming: how to price the loan.Firstly, this thesis reviews the conditions about the loan pricing in the domestic and overseas, and introduce the principles and the main factors of loan pricing in order to better comprehend the methods of loan pricing in the following text. Subsequently the author discusses the process of the marketization of interest rate in China and how to impacts on loan pricing of commercial banks. In chapter 3, the author deals with the methods of loan pricing in western banks——cost-plus loan pricing, price leadership, customer profitability analysis, and give some cases one by one in order to understand the methods.The main part of this thesis is in chapter 4, the author studied the advanced methods of loan pricing in foreign countries, details the basic idea, the main structure and the process of the models of loan pricing, and give some cases by steps in order to comprehend these methods. Of course, we can't apply the methods follow the prescribed order, so the author not only gives the objective valuation to the advanced methods but also analyses the main problems of loan pricing in our commercial banks in chapter 5, and table some proposals of establish and improve on the system of loan pricing.