Based Relationship Lending Banks On Small Business Loan Pricing

Big state-owned commercial banks are confronted with more serious competition as the finance industry of our country becomes open. Moreover, the traditional clients of big banks have more bargaining power and financial disintermediation becomes more and more popular. All those lead to shrink of profit of commercial banks. Big banks are eager to search for new and stable profit source. At the same time, small business are confronted with finance difficulties even if they are becoming more important in our economy. Small business need comprehensive financial services including finance, settlement, financial management, investment bank advisor, electric bank, bank card and so on.In such circumstance, we try to find intersection of big banks andsmall business which may lead to win-win——big banks win moremarket share and future honest clients, and small business grow vigorously by more comprehensive financial services from big banks.Based on financial intermediam and financial growth cycle of small business, we study the symbiosis relationship between banks and small business and find that the best way connecting big banks and small business is relationship lending. It goes with the fact of our country and is a sustainable development for both big banks and small business. after studying the applicability of the current loan pricing model, we formulate a pricing model of relationship lending which reasonablely distributes relationship rents to compensate profits over periods. Next, we calculate the relationship rents with the data of big stated-owned bank and the interest rate of relationship lending in a case. In the end, we put forward some relative measures for the expansion of the business and the adoption of the model.