Analysis Of “Li Deying” Financing Product Of CCB

With the deepening of reform in China’s financial system and interest rate marketization, commercial banks are facing increasingly greater competitive pressures. Therefore, commercial banks continuously make innovations in their products and services so as to capture greater market share and enhance profitability. In September 2004, China Everbright Bank pioneered the "sunshine financial plan" products, which announced the beginning of RMB financing products business in China’s commercial banks. Subsequently, a number of joint-stock commercial banks also offered distinctive RMB financing products. These financing products offered by commercial banks bear the characteristics of high degree of specialization and security. They were greatly welcomed by investors because they properly meet people’s asset management needs. Today, financing products have not only become an important source of funds for commercial banks, but also become an important option for residents to invest their funds. Therefore, to strengthen the study of financing products of China’s commercial banks is of great theoretical and practical significance.Based on the analysis of "LiDeYing" financing product launched by China Construction Bank in 2007, this article aims to explore the basic characteristics and development strategies of bank’s financing products as well as their impact on commercial banks in China. The whole article is divided into six parts. The first part is an introduction to the background, the significance and the main contents of this research. The second part is the overview of bank financing products and "LiDeYing" financing product launched by CCB. The third part analyzes the pricing and risks of "LiDeYing" financing product, which begins with the comparison between B-S option pricing method and Monte Carlo method, concluding that for financing products Monte Carlo method is more reasonable through empirical analysis of "LiDeYing" product. Then risks of "LiDeYing" financing product are analyzed from the aspects of both investors and commercial banks. The fourth part studies the factors influencing the yield of "LiDeYing" financing product and makes empirical analysis with statistical model. The fifth part focuses on the analysis of the benefits and disadvantages brought about by "LiDeYing" financing product to CCB. The sixth part summarizes the whole article and makes recommendations to commercial banks as well as investors and regulators.One of the key points of this study is to determine whether "Li DeYing" financing product is worthy of investment. Through the analysis of its pricing, risks and yields, we conclude that "LiDeYing" financing product is quite attractive to prudent investors. The other key point is to analyze the impacts of "LiDeYing" financing product on CCB. We holds that although the issuance of financing products can improve commercial banks’ liquidity and profitability, it will also increase the financing costs and operation risks of commercial banks. This article is of great significance to the perfection of designing financing products for commercial banks, and is also helpful to investors for them to choose rationally related financing products.