An Empirical Analysis On Factors Affecting The Loan Pricing Of Commercial Bank In China

Loan pricing is a vital part of the management of commercial bank, it determine theasset quality and profitability of the commercial banks. With the continuous deepening ofChina’s reform of interest rate marketization, the loan independent pricing of commercialbanks is the necessary requirement of the marketization of interest rate in China. To builda scientific and reasonable loan pricing model, a fully exercise the decision-makingpower of loan pricing is very significant to the efficient management and healthydevelopment of China’s commercial banks.This paper uses the loan information of Chinese public companies in2004-2012asthe sample, then we can infer the bank’s loan pricing behavior from the micro level ofenterprises. In the article, we select the rising or decline of bank loan rates overbenchmark interest rates rather than the loan interest rate as the independent variable andthen use the multiple regression analysis method to carry out an empirical analysis on thefactors of the loan interest rate in China`s bank, measuring the impact of thecharacteristic variables in the loan and the key financial indicators of an enterprise on thebank loan pricing. In this paper, the results of empirical research show that the loanamount, loan types and loan bank`s attribute have a significant effect on the loan interestrate, when the loan amount is higher, loan interest rate spreads is greater. The banklending rates of the guaranteed loan is greater than the credit loan`s interest rate. The loanpricing of the state-owned commercial banks is generally lower than joint-stockcommercial banks. The research results also show that, the financial status of theborrowing enterprise play an important role in the process of a commercial bank`s loanpricing, the potential mortgage rate, the undistributed profit rate, the long-term capitalratio and liquidity ratio are significantly negative correlated with the fluctuation overbenchmark loan interest rates, and the higher the above financial indicators, the less theloan interest rate float. At the same time, asset-liability ratio and sales growth rate of thecompany exhibit a positive effect on the fluctuation of loan interest rates, with their valuehigher, the bank loan pricing is higher. At the same time, the determinants of interest ratein long-term loans and short-term loans exist differences, and so do guaranteed loan andcredit loan.