Study Of Internal Funds Transfer Pricing For Our Commercial Banks

With the opening financial market of china, China's commercial bank is facing more and more challenges, which are not only from the competitions between banks, but also from the internal management requirement. Under the requirement of capital adequacy and interest rate market-orientation, application of funds transfer pricing is main trend, for this tool is able to assist banks in china to enhancing the profit and improving the management towards a higher level. The mechanism of internal transfer fund pricing in commercial bank causes the concerns and research from more scholars since it can manage the interest risk centralized and use leverage to allocate resource effectively as a scientific management tools.The article introduces the definitions, structure, function as well as its operation mechanism in bank management of funds transfer pricing firstly and also compare with the different modules used in foreign commercial banks. Then we analyze the environment of commercial banks in China and study the feasibility for using such system in China. Based on the result, we can begin to establish the appropriate system of funds transfer pricing with our commercial banks. Recommendations on implementing FTP system are put forward as well. At last the article make the case study of a city branch of a bank of china in implementing FTP system.