Study On Funds Transfer Pricing Mechanism For Commercial Banks

Funds Transfer Pricing(FTP) refers to the price which generates in the process of funds flowing between different department, products and institutions in a bank. Nowadays,China's banking industry is in the process of speeding up reform so as to establish a modern banking system. The establishment of FTP mechanism is put on the agenda of banking development because of the external pressure in market-oriented interest rate reform, and the internal demand in assets and liabilities management. Along with the gradually open steps in China's financial markets, it is definitely that funds transfer pricing mechanism will become an important measure to enhance internal management level of China's commercial banks.Based on the above consideration, the paper will pay attention to the following aspects with qualitative and qualitative methods. First, the author gives a brief introduction to the research background, meaning reviews and framework of this article.The second is the analysis on the definition, operational process and principle of FTP. Third, the author gives a detailed analysis on the operational mode and pricing method of FTP mechanism in western commercial banks, focuses on the mainstream which are matched maturity marginal mode and yield curve pricing method. Fourth, the author brings forward the framework of FTP mechanism for China's banking industry. The article points out that the organizational form of funds transfer pricing mechanism should be distinguished between large banks and small or medium-sized banks, using differcial-balance and headquarter-centralization form respectively, meanwhile, adopting multiple-pool operation mode. As for pricing method, yield curve method doesn't in conformity with China's conditions. The article agrees with adopting average cost method primarily, combining with marginal cost method. Besides, the article deduces a benchmark price model of FTP. Futher more, the author gives an empirical study with relative data of a bank, proved that the model is reasonable in a certain extent.One specialty of this article is, in view of the weakness in theoretical research and pricing basis of FTP theory in current domestic papers, this article builds an academic framework of FTP theory clearly. In addition, it constructs the FTP mechanism for China's commercial banks innovatively, comes up with related pricing model and verifies its reasonableness. These all can privde some reference for China's banking industry to improve internal management level and establish a modern banking system.