Commercial Bank Loan Pricing Based On Credit Risk Measurement Study

With the development of financial markets, the financial sectors play more and more prominent role on economic development stability. As the basic price index of financial markets, interest rates become an important aspect of reformation of the financial system. Market-oriented interest rate has become the basic requirement to achieve the market economy. Developing our financial markets requires deepening the reform of market-oriented interest rate, which is not only a challenge but also an opportunity to our banking industry. Facing the drastic competitive environment, every domestic bank has to improve its loan pricing ability in order to improve competitiveness.The thesis uses the KMV model to analyze the borrower's credit risk on the basis of the analysis of various theories and models, and then builds a loan pricing model. On the basis of above, this paper selects a listed company's loan randomly as an example, and use the model built above to test.The results show that using KMV model to measure the borrower's credit risk can reflect the credit situation reasonably in a certain stage. At last, we get the conclusion that compared with the loan interest rate which is set by commercial bank; the initial interest rate makes a little difference, and complies to the requirements of the central bank basically.Studies suggest that, strengthening the research of loan pricing and improving the commercial banks' loan pricing ability is the key to the financial system reformation. Domestic banks should build their own related database, change the traditional qualitative analysis to the dynamic quantitative analysis, and distinguish credit risk situations and the different borrowers to make price. By doing so, the commercial banks can improve their competitiveness continuously and keep on top in the future development.