Research On IPO Pricing Of Chinese Commercial Banks

At the beginning of 2016,the CRSC has permitted the stock offering of WUXI rural commercial bank and JIANGYIN rural commercial bank, which was an important thing for all of the commercial banks, since no commercial bank has ever been permitted to be listed since 2010.For commercial banks, there are many benefits for listing on the stock market. Firstly, they can raise a lot of capital through this way so than can concentrate on improving service and diversify their business. Secondly, more capital means more stability, which will enhance customer confidence. For banks, in order to get published, they have to improve their abilities from all aspects, only in this way can they win the trust of investors.At the same time, the implementation of stock registered system will create better conditions for banks. Since 2013, ChinaChina has been promoting reform on this. The SEC has formulated the basic rules of stock registration system. Under this this system, as long as banks meet the basic requirements, they can be listed on the market. At the same time, banks and securities will have more flexibility in IPO pricing. So it is really important that we find an appropriate model for IPO pricing.There is no doubt that under the registration system, there will be more opportunities for banks to get published since they don't have to wait for the chance, they can just submit the files as asked. Since the SEC has no liability to make sure that the listed companies are worth investing, investors themselves have to distinguish if the company should be invested. We can expect that investors will be more cautious with the IPO stocks. They will use their own knowledge to judge the stock value, so it is important that we find a way for investors to evaluate the stock. We can also see from the connection of the primary market and the secondary market. First, if the IPO pricing is reasonable, resources will be allocated according to demands, which will improve the efficiency of resources. Second, if IPO price is lower than that of the secondary market, there will be arbitrage opportunities, which is a loss for the listed companies. So it's important that we find a reasonable price for the stock.In terms of the IPO pricing model, many scholars have their own opinions. What's common is that they agree that the pricing model should take the investment environment into account. After reading these articles, I found that there are few papers taking about the pricing of modern commercial banks, so in this paper I will try to build a reasonable model. I think this will give advice for investors as well as banks.Through analysis, we made these conclusions:First, the two markets both reflect the value of listed companies. However, Chinese stock market contains more outside factors. Second, for IPO pricing, factors such as earnings per share, capital adequacy rate, return on net assets, net assets per share, news all play very important roles. Third, this paper shows the importance of news on the IPO pricing. In this paper, we find information effect do exist in the market. However, emotional effects are not sure. The increase of positive coverage degree will affect the investor's investment enthusiasm.Finally, the article put forward some policy Suggestions from three aspects. First, we should change the present stock issuing system and implement registration system reform step by step. From the analysis we can see that the main cause of the excess return rate can be attributed to the secondary market investment enthusiasm. The main reason is that the supply of new stocks is far less than demand. However, under the registration system, there will be more companies issuing stocks. Second, we should strengthen the authenticity of the media, improve the media social responsibility as well. As we can see from the article, media reports can provide information and influence people's emotions. Therefore, as the media intermediary, reports should contain more information. At the same time, reports should be objective. Media should fulfill its social responsibility. Third, in order to get published, commercial Banks should focus on their own capital ability, profit ability, risk profile and other factors, and improve enterprise comprehensive strength. At the same time, they should use the media to improve its visibility.