Research On Pricing Model Of Relationship Lending From Small And Medium Commercial Banks To SMEs

Banking, especially small and medium commercial banks are confronted with moreserious competition as the finance industry of our country becomes open. Small andmedium commercial banks are eager to search for new and stable profit source. At thesame time，small and medium-sized enterprises (SMEs) are confronted with financedifficulties even if they are becoming more important in our economy. Financingdifficulties as a major problem is troubled by SMEs.We study the symbiosis relationship between banks and SMEs and find that thebest way connecting small and medium commercial banks and SMEs is relationshiplending. It goes with the fact of our country and is a sustainable development for bothsmall and medium commercial banks and SMEs. After studying the applicability ofthe current loan pricing model, we formulate a pricing model of relationship lendingwhich reasonably distributes relationship rents to compensate profits over periods.Finally, we compare the pricing model of relationship lending with the current loanpricing model and the result shows that relational loan pricing is much better than theexisting pricing of loans to SMEs. SMEs obtain more favorable loan interest rates meanwhilethe bank achieves a long-term profit goal and wins customers and market share.