Research On Loan Pricing Of SY Rural Commercial Bank Based On RAROC Model

Loan pricing refers to the interest rate that commercial banks charge customers for their loans(All loans in this article refer to public loans).The interest rate formulation is first related to customers’ credit rating,credit risk,loan need costs,income level and capital supply and demand,second associated with the banks’ own capital costs.The loan interest rate sets by the bank should realize the unification of security,liquidity and efficiency.Since the reform of interest rate liberalization in China major commercial banks have the power to set their own pricing on loans.Commercial banks determine their interest rate according to many factors such as their own assets,operating conditions and capital cost_It not only enhances the flexibility in loan pricing of banks,but also energizes the credit markets.SY Rural Commercial Bank is rural credit cooperative before.It was restructured to a commercial bank in 2011.Due to the restruction is not very long,the internal management mechanism has not yet reached the standard of modern commercial banks.SY Rural Commercial Bank is at a weak position in the fierce market competition.Therefore it’s important for SY Rural Commercial Bank to set up correct management concept,improve credit risk prevention consciousness and determine a loan pricing method.RAROC loan pricing model is based on the comprehensive risk pricing.The method makes it possible for banks to match loan pricing and risk,achieve the goal of security and profitability.It is consistent with the principles of loan pricing.This article is divided into five chapters.Chapter 1 is the introduction.It introduces the research background and research significance of this article.It studies papers about marketization reform,theory of interest rate theory,and loan pricing.And it also introduces the research idea and method of this paper.Chapter 2 introduces the theories and ways of loan pricing.The theories of loan pricing are asset and liability management theory,Marx’s interest rate decision theory,classical school interest rate decision theory and Keynes’s theory of liquidity preference.The ways of loan pricing are Cost-Plus Loan Pricing,Price Leadership Loan Pricing,Customer Profitability Analysis Loan Pricing and RAROC loan pricing model.Chapter 3 introduces the development history of SY Rural Commercial Bank and the status of credit business,and analyzes bank loan pricing problems of SY Rural Commercial Bank.Chapter 4 chooses an enterprise of SY Rural Commercial Bank as a sample to analyze the difference between RAROC loan pricing model and current loan pricing method.Finally,it makes some recommendations about implementing RAROC loan pricing model of SY Rural Commercial Bank in the future.Chapter 5 summarizes the research results and shortcomings of this paper.