Abstract
In recent years, commercial banks and other financial institutions have been carrying out unprecedented reforms on the marketization of interest rates, and the floating space of loan interest rates has been constantly expanding. Therefore, loan pricing has become the most critical link of Chinese commercial banks. It is urgent to construct a scientific and objective loan pricing model so as to keep pace with the competition rhythm of commercial banks in developed countries and make the allocation of financial resources in China more optimized and better serve the economic development of China in the new stage. First of all, this paper analyzes the existing loan pricing model of Chinese commercial banks, deeply recognizes the impact of human subjectivity on loan pricing, and then determines that the core index of loan pricing, namely risk rating, should be evaluated by the objective back propagation algorithm, namely BP algorithm. On the basis of these theories and practices, this paper discusses the new loan pricing model of Chinese commercial banks, that is, the loan pricing based on the risk rating classification of BP algorithm, and conducts an empirical analysis with the sample customer data. Finally, it gives relevant recommendations from the macro-external factors and its own internal system on improving the loan pricing to commercial banks.
Highlights
According to the market competition investigation report of China’s commercial banks, the problems reflected in the report are summarized and analyzed
This paper introduces the four pricing modes of loan pricing in China’s commercial banks as follows: Mode 1: A hierarchical pricing model in which interest rates are determined by a single factor
The commercial bank credit risk rating based on artificial intelligence BP algorithm proposed in this paper can effectively according to the interest rate marketization, stand out in the domestic and foreign commercial bank competitive market, and can objectively price the interest rate of loan customers
Summary
According to the market competition investigation report of China’s commercial banks, the problems reflected in the report are summarized and analyzed. Due to the market awareness has not yet been fully formed, the role of cost and risk has not yet been clearly understood, and the market strategy has not yet formed a rich experience system These factors can not be the way to determine the market pricing of modern banks [2]. This paper introduces the four pricing modes of loan pricing in China’s commercial banks as follows: Mode 1: A hierarchical pricing model in which interest rates are determined by a single factor. Mode 4: The pricing model is determined by the risk rating as a condition It is an important content for commercial banks to consider according to the customer’s credit rating, so as to determine the loan pricing according to the customer’s credit rating. In order to become the most advanced loan pricing model of commercial banks, the most important thing is to make a reasonable assessment of the risk level, which requires the risk assessors to abandon their subjective factors and use scientific and objective methods to complete the process of risk assessment [4]
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