The Research On The Design And Pricing Of Chinese Structured Financial Product

Since the reform and opening-up, Chinese economy grows rapidly and people’sliving standard improves constantly in the past30years. Accompanied with thegrowth of residents’ deposit income, financial management is faced with manyindividuals. In order to meet the growing need of financial management, each offinancial institutions issues all kinds of financial product, in which structured productgets highly favored by the majority of investors, for its unique structural design andrisk-return characteristics.The essence of structured financial products is a kind of new financial productswhich are linked together through financial engineering between fixed incomeproducts (such as deposits, zero coupon bonds, etc.) and financial derivatives (suchas options, forwards, swaps, etc.). If the yield to maturity of the fixed part of thefinancial products is the same with its price, then that financial product will beguaranteed financial product, which attracts many investors, and the performance ofthe underlying asset determines the rate return of the financial product and its risk.According to the underlying different attributes, structured financial products can bedivided into equity-linked, currency-linked, commodities-linked (such as gold) andother types, such as index-linked.Structured financial products appeared in Europe and other developed capitalmarkets at first. In our country, structured financial products first appeared in2003,although the distribution of structured finance started late in our country, thedeveloping rate is rapid. However, the researches of structured financial products aremainly from foreign academics. And domestic scholars are mostly concentrated inqualitative terms, which could not deeply understand the level of benefits and risks ofstructured financial products or play a supporting role in the healthy development ofthe market for structured financial products.This paper first introduces the research background and domestic and foreigndynamics, on the basis of a summary of the presentation and the development ofstructured financial products are classified. The second part is the focus of this article,introducing the design and pricing process of structured financial products, making empirical analysis. The third part presents our targeted structural problems in thedevelopment of financial products currently, and briefly gives some suggestions.Finally, the full text is summarized.