Research On The Loan Pricing Of Commercial Banks Under The Interest Rate Liberalization

1980s,China has been implementing interest rate control system,interest rate liberalization began with the liberalization of inter-bank lending market in 1996.In October 2015,China’s central bank to liberalize the deposit interest rate cap,which means that nearly 20 years of market-oriented interest rate reform has ended.The marketization of interest rate means that the interest income of commercial banks,which is the main income source of our country’s commercial banks,has lost its policy guarantee.The competitive mode of commercial banks is changed from non-price competition to composite competition.Assets and liabilities are exposed to markets risks,and the traditional businesses are shrinking,competition pressures are intensifying,Commercial banks are facing enormous challenges.To cope with fierce competition,on one hand,commercial banks should change the business mode,adjust the balance structure.On the other hand,they should develop a scientific and rational lending pricing mechanism to ensure the stability of interest income spreads.At present,the loan-pricing abilities of China’s commercial banks are relatively weak,large and medium sized banks are better,who can formulate a more scientific and reasonable loan pricing method in accordance with their situation.Lacking of historical statistics and market data,the loan-pricing methods of regional commercial banks and mini-sized banks are backward.Reviewing the domestic and foreign scholars’ literature on the loan pricing theories and models,I found out the loan-pricing theoretical basis and practical shortcomings.And then I summarized the advantages and disadvantages as well as the applicabilities of the typical models of loan-pricing,such as cost plus method,price leadership method,customer profit analysis method,KMV option pricing method and risk-adjusted return method.Combining with the status quo of China’s commercial bank loan-pricing and the impacts of interest marketization,I put forward the basic principles of loan-pricing,think that due to the differences of practical abilities and operation objectives,different sizes of commercial banks could not apply for the same pricing method by following an rigid uniformity,but to adjust and perfect their current pricing methods.City commercial banks is significant in the financial market,so we take them as an example to do the research.In the process of loan-pricing,the selection of benchmark interest rate is the key.Therefore,I quantitatively analyzes the applicability of Shibor as the benchmark from the aspects of marketability,fundamentality,relevance and stability.It shows that the statistical characteristics of Shibor conform the standards of the benchmark interest rate.In the end,I suggest that commercial banks should perfect the pricing mechanism,enhance the cost and risk management,introduce and cultivate the financial management talents.