Research On The Issue Of Loan Pricing In CFHS Credit Cooperative

Marketization of interest rate is the key point of Chinese financial reform in recent years.Deposit interest rate has been completely liberalized.Reform of loan interest rate,base interest rate,which is setting by the central bank recently,gradually move forward in the direction by the market.When the reform is completed,banking financial institutions will face the fierce market competition directly,also the uncertainty of operation will be further increases.Under the circumstances of interest rate marketization,it is obviously important to the banks,to build a set of loan pricing mechanism that can make profits,adjust flexibly and cover risks.CFHS Credit Cooperative is a local corporate financial institution of Chifeng,Inner Mongolia.In recent years,the loan business pricing of the CFHS Credit Cooperative is significantly higher than the local average level,and its competitiveness has declined,which is not conducive to the long-term operation of the institution.With the development of agriculture related and petty loan business in large and national commercial banks,a great quantity of low interest loan funds gradually enter the county credit market.It is a great impact on the loan business of CFHS Credit Cooperative.The current loan pricing model can no longer adapt to the changes in the market.It is need to be changed.The paper takes CFHS Credit Cooperative as the research object,introduces three important basic theories of determining interest rate,include the classical interest rate theory,the liquidity preference theory,the loanable-funds theory of interest,and also introduces the development process and operation status of CFHS Credit Cooperative.This paper focuses on the investigation of the causes of the interest rate pricing problems of CFHS Credit Cooperative.The investigation has showed that the main problems of CFHS Credit Cooperative's loan pricing are simple and rough pricing process,poor coordination of pricing departments and inadequate pricing support system.Combined with the problems,this paper analyzes the reasons of the problems from three aspects: lack of scientific pricing awareness,insufficient investment in loan pricing,and unclear rights and responsibilities of loan pricing departments.This paper holds that five aspects should be taken to solve the problem of loan pricing.First of all,CFHS Credit Cooperative should establish a scientific concept of loan pricing,adhere to the rationalization of target profits,and strengthen the awareness of loan pricing risk.Secondly,they need to increase investment in loan pricing,not only in technology but also in personnel.Third,refine the loan pricing process and standardize the pricing model.Fourth,improve the coordination mechanism of pricing departments,clarify the authority of loan pricing departments,and establish the loan pricing supervision system.Fifth,improve the loan pricing support system,including improve the FTP system,maintain the customer information system,and upgrade the risk assessment system.