An Optimal Model Design for Pricing Loans by Our Commercial Banks
Guan Da-y · Jinrong luntan · 2006
With China's accession into WTO and gradual integration of domestic financial market with international financial market, China has steadily eased the ceiling control over enterprise loan rate. As a result, commercial banks are able to set a reasonable loan price according to market demand to make loan rate fully compensate for the credit risks they have taken to guarantee safety and profitability. The present paper deals with the existing problems in loan pricing and points out that information asymmetry does prevail in our credit market, which has considerably influenced the operation and decision-making of commercial banks. Through the framework of trust-agency and optimal cybernetics, a reasonable pricing model for information asymmetry is established. Finally, the paper offers some operative suggestions on how to effectively improve the operation and management of our commercial banks.