Study On The Commercial Bank's Small Loan

China's commercial banks are facing many issues: the financial media compression from the credit market, the competitive challenge from foreign banks'impacting the credit market shares, the increasing liquidity surplus which expands the credit market pressure, and many other difficulties etc. Furthermore, there are a lot of problems in SMES, financing,urban employment loans and farmers loans. It is a dilemma that the Liquidity surplus of banks and loan demands not being met coexist. The paper supports the view that the small loans can help Chinese banks to resolve the dilemma. For the successful launch and increasing growth of the small loans, it is hardly needed to address two key issues: the first is the issue of pricing on Lending-Rate. Such factors as the cost of banking,risk and loss of earnings objectives,competition in the market strategy should be considered in the determination of lending rates. The price competitiveness of financial institutions should be based on rationality. In the paper, the author chooses the traditional lending-rate pricing model for analysis, respecting the characteristic of small loans. The four models are: Cost-plus Loan Pricing,Price leadership Loan Pricing,Customer Profitability Analysis Loan Pricing and Cost-benefit Loan Pricing. Being based on these four models the paper achieves the conclusion of"Best lending rate range"according to the theory of New Keynesian school .The second is the issue of the risk control over the loan. Commercial banks need to effectively control lending risks to guarantee the sustained security of small loan and financial stability. Besides the credit system construction, loan guarantees and other measures to control the loan risk, we believe that information restraint mechanism and system innovation and restraint mechanisms are important and effective measures. In this paper the author analyzes the micro-credit transactions of the Postal Savings Bank of China basing on the game theory. We come to the conclusion that the united secured loan system is effective.This paper is divided into four parts: the first part studies on the necessity and feasibility for commercial banks to open up the market of small loan transaction;the second part studies on the small loans lending rate pricing issue;the third part studies on the loan risk control issue;the fourth part sums up the full text and give specific policy recommendations.