Establishment And Application Of Assessment System To Evaluate Interest Rate Pricing Ability Of Medium And Small Financial Institution

Proceeding with the construction of interest rate pricing mechanism is requiredwhen we promote market-oriented interest rate in order to achieve a market-orientedinterest rate mechanism which owns pricing independence, market formation,regulatory flexibility, and smooth conduction and market interest rate system which isrational, orderly, fully competitive. As the logical starting point of China’smarket-oriented interest rate reform, the Inter-bank lending market interest rate wasreleased in1996, followed by Bond market interest rates, Foreign currency lendingrates and Bulk deposit rates releasing, the loan interest rate floating range graduallyexpanding and interest rate grades simplifying to achieve the phased reform goal thatis to supervise the ceiling limit of the deposit rate and the lower limit of lending raterespectively. At present, China’s market-oriented interest rate reform has entered acrucial stage, the pricing power level of the financial institution who’s themicroeconomic subjects has become a key factor to achieve a breakthrough in the nextphrase. It is a feasible path to give financial institution different pricing authorityaccording to their interest rate pricing ability in the next phrase. With furtherdeepening of interest rate liberalization reform of China, how to assess the interest ratepricing ability of financial institution has been a new urgent task for related financialadministrative sectors to settle. In China, study on defining or assessing interest ratepricing power was still in the blank, so trying to build a indicator system to assessingthe pricing ability of financial institution especially the small and medium size onesand meanwhile to promote the upgrade of the pricing power of them has importantpractical significance.In the paper, I selected small and medium-sized financial institutions asevaluation objects. Proceeding from actual situation of interest rate pricing mechanismconstruction and requirements of promoting the interest rate market reform, weexplored to establish an interest rate pricing capability assessment index system forsmall and medium-sized financial institutions based on comprehensive considerationof interest rate pricing mechanism construction, actual implementation of the interestrate pricing and basic conditions that may affect the interest rate pricing capability ofthe evaluation objects and affirm the index weights with expert scoring and AHPmethods. Finally, I carried out the assessment on24samples of corporate financial institution in Hunan Province and evaluate the results based on statistical clustering,then I put forward proposals to promote small and medium-sized financial institutionsto strengthen the construction of interest rate pricing mechanism and improve interestrate pricing ability, expecting to provide a useful reference to further promote China’sinterest rate reform. Analyzed the interest rate pricing ability of cooperate financialinstitutions sampled from Hunan province, I found that the constructed interest ratepricing mechanism in this paper is reasonable and feasible. Selected index is proper,hence the results are fit well with market’s analysis data. Objectively, the constructedinterest rate pricing mechanism in this paper need some research and improve, in theaspects of parameter’s selection, practical operation, etc., to accord with China’s actualconditions and to make sense in reality.