Research On Internal Funds Transfer Pricing System In Changchun Rural Commercial Bank

Funds Transfer Pricing(FTP)is the fundamental mechanism for commercial banks in recent years,which means a yield curve for internal funds transfer between the treasurer and the operating department.Generally speaking,commercial bank can achieve several goals from funds transfer pricing,such as distribution of profits,isolation of risk,guidance for external interest pricing,allocation of resources and reasonable assessment of performance.In the background of the interest rates marketization reform,commercial banks are facing a great challenge in external interest pricing and profit management.Therefore,they need to establish the internal funds transfer pricing mechanism as quickly as possible to make sure that they can manage the profit distribution in reasonable way and achieve the profit objects.It has been more than ten years from 2005 when internal funds transfer pricing mechanism is applied by the commercial banks in China.So far,most big-sized banks,including nationalized banks,national joint-stock banks and municipal commercial bank,have already establish the internal funds transfer pricing mechanism successfully.But the small and medium-sized commercial banks are still in the initial stage.Like most other small and medium-sized commercial banks,Changchun Rural Commercial Bank did not make much progress on the internal funds transfer pricing mechanism.But these kinds of banks,including Changchun Rural Commercial Bank,encounter a much larger challenge from the interest rates marketization reform,because of their smaller assets and profits.Therefore,this study of internal funds transfer pricing mechanism in Changchun Rural Commercial Bank,would be significant for other small and medium-sized commercial banks.This study is focused on Changchun Rural Commercial Bank,which is evolved from rural credit cooperative.This bank is the third-largest corporate bank by assets in Jilin province by now.Changchun Rural Commercial Bank prepared the application of internal funds transfer pricing mechanism in 2012.After the period of construction in 2014 for internal funds transfer pricing system,Changchun Rural Commercial Bank has already put this system into production since 2015.Through practice for three years,many problems in system,policy and application,has been found for improvement.Based on the internal funds transfer pricing theory at home and abroad,this study focused on the internal funds transfer pricing mechanism of Changchun Rural Commercial Bank.From the analysis of problems in internal funds transfer pricing mechanism,this study figures out the reasons and solutions for those problems.The most important problems in the internal funds transfer pricing mechanism of Changchun Rural Commercial Bank has been concluded,such as defect of internal control system,incompletion of supporting system and lack of interest rate risk control.Aimed at those problems and the development of bank,this study proposes solutions for the establishment of internal funds transfer pricing mechanism from policy,system and application.Those solutions can provide guidance for the establishment and improvement for the internal funds transfer pricing mechanism of Changchun Rural Commercial Bank.