Study Of Internal Funds Transfer Pricing For Commercial Banks In Market-Orientation Environment

The commercial banks in China have to face the interest risk when it becomes market-orientation more and more. At same time the interest risk solicit other problems such as financial product pricing and performance evaluations. The mechanism of internal transfer fund pricing in commercial bank causes the concerns and research from more scholars since it can manage the interest risk centralized and use leverage to allocate resource effectively as a scientific management tools.The article introduces the definitions, structure and function of funds transfer pricing firstly and also compare with the different modules used in foreign commercial banks to demonstrate the risk prevention function of this mechanism. Then we analyze the environment of commercial banks in China and study the feasibility for using such system in China. Based on the result, we can begin to establish the appropriate system of funds transfer pricing with our commercial banks. The innovation point of the article is to exhibit the process of interest risk transferring and central management of internal transferred fund pricing in commercial banks via the mechanism. Also, it founds a transition module for the internal transferred fund pricing according to the imperfect actuality of finance environment in China.