Home Resources Library SME finance A new pricing approach for SME loans issued by commercial banks based on credit score mapping and archimedean copula simulation
Report A new pricing approach for SME loans 2019

A new pricing approach for SME loans issued by commercial banks based on credit score mapping and archimedean copula simulation

The approach for pricing loans of commercial banks basically adopts the way of adjustingcertain premium/discount points based on the benchmark interest rates, with premiums/discounts often reflects the credit ratings of the firms applying the loans.

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Greater competition and diversity in lending, payments, insurance, trading, and other areas of financial services can create a more efficient and resilient financial system.

Notwithstanding these clear benefits to financial stability, heightened competition could also put pressure on financial institutions’ profitability. This could lead to additional risk taking among incumbents in order to maintain margins. Moreover, there could be new implications for financial stability from BigTech in finance and greater third – party dependencies.

While markets have developed differently across jurisdictions, there are commonalities that warrant international discussion. While these comm onalities may be global in scope, their impact on each jurisdiction depends on the state of development of the financial services industry and the regulatory environment.

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English

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15

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