Research On Pricing Model Of Loans From Commercial Banks To Small And Medium Enterprises Based On Real Options

At present, commercial banks, Small and Medium Enterprises (SMEs) are all facing severe survival challenges and development pressure. With the further aggravation of commercial banks’ competition, the big state-owned commercial banks, joint-stock banks and city commercial banks all treat loans to SMEs as a new profit point. While under the condition of economic slowdown and high inflation, SMEs are also keen to get credit support, and hope to get more financial services from commercial banks. On this background, the loans from commercial banks to SMEs will get raped development. But the SME loan pricing is still a difficult problem.To solve the problem of SME loan pricing, the characteristics of SME financing and the lending technologies used by commercial banks should be understood. In this paper, we try to find out what lending technology is chosen in the cooperation between China’s commercial banks and SMEs. The paper comes to a conclusion that the relationship lending is the main lending technology in the cooperation, which is the theoretical basis for establishing the following loan pricing model.This paper explores the pricing method of loans from commercial banks to SMEs, namely the reasonable calculation method of loan interest rate. The change of lending technology directly reduces the adaptability of traditional loan pricing theories, and the SME loans marked with relationship lending need an adaptive pricing method. In the framework of the relationship lending theory, SME loan pricing should consider the long-term relationship between banks and SMEs, because banks providing relationship lending to SMEs actually gain some real options. This paper establishes a SME loan pricing model based on real options. The model takes into account the characteristics of relationship lending, and adds the values of real options into the loan pricing process. Based on the two-term model, this paper explains how the values of expansion option and abandonment option affect the SME loan pricing. Then a specific example is used to demonstrate the pricing process of the pricing model.This paper not only attempts to establish a SME loan pricing model, but also tries to find out why the SME loans are associated with relationship lending and how the values of real options affect the loan pricing.