Shanghai Pudong Development Bank To Expand Sme Relationship Lending Business Analysis

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. The 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, Shanghai Pudong Development Bank is trying to find intersection of banks and small business which may lead to win-win——Pudong Development Bank would like win more market share and future honest clients, and small business grow vigorously by more comprehensive financial services from Pudong Development Bank.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 banks and small business is relationship lending. It goes with the fact of Pudong Development Bank and is a sustainable development for both banks and small business. then 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.