A Pricing Analysis On The Structured RMB Financing Products Of Our Domestic Commercial Banks

Structured financial products have become a new profit growth point in China’s commercial banks, and have great prospects for development and space. But the pricing and the design level of the structured financial products are still in the initial stage, and seriously lag behind foreign banks. Domestic commercial banks are generally responsible for raising funds and selling products, and offer the right of product pricing to the foreign investment bank. As a result, domestic commercial banks are retailers, can be considered as the transit point and are in the most downstream of the value chain. Foreign banks have the right of pricing and are decision-makers. So most of the income is attributed to foreign banks, and the domestic commercial banks and investors can only get a small part. In order to change this situation, the pricing level should be improved in order to make the domestic commercial banks and investors get more revenue. Therefore, the basic characteristics and the design techniques of the structured financial products have becomed particularly important.This article is divided into five parts. The first part is the introduction which contains the significance and background, the research status, the frameworks, the methods and the innovations. The second part is the basic characteristics of the structured financial products, mainly about the definition and composition of structured financial products, classification and the development in China. The third part is the pricing theory of the structured financial products,it introduces the decomposition and combination technology and the pricing methods of the structured financial products. The Black-Scholes model and Monte Carlo simulation are two mian ways. The fourth part is the empirical analysis of the structured financial products. Two structured financial products are selected to pricing analysis by the Black-Scholes model and Monte Carlo simulation. The fifth part are the summary and the recommendations of the pricing of the financial products. The key of this study is how to reasonably pricing the structured financial products. This paper combine theory with empirical analysis to study the pricing. Firstly, a gold linked strucured product contained a typical European option are analyzied with the Black-Scholes model and Monte Carlo simulation. Through the comparison of the results we will know that Monte Carlo simulation method is more reasonable pricing methold. Then we choose a financial product which contains early redemption option and Asian option and four linked stocks to analyze the pricing process. This study solved the pricing problem which is rarely studied and lained the foundation for future research.