Product Network Connectivity and Information for Loan Pricing

Credit derivatives and loan pricing

This paper examines the relation between the new markets for credit default swaps (CDS) and banks’ pricing of syndicated loans to US corporates. We find that changes in CDS spreads have a significantly positive coefficient and explain about 25% of subsequent monthly changes in aggregate loan spreads during 2000–2005. Moreover, when compared to traditional explanatory factors, they turn out to b...

Pricing and Hedging Loan Prepayment Risk

Many financial products contain prepayment options. Loan contracts are often structured to provide the borrower with the option to prepay the loan at any time, or on specific dates, prior to the maturity date of the loan. These options are important aspects of these financial products. The most commonly encountered investment product with these feature is the mortgage backed security. Investmen...

Improving Information Quality in Loan Approval Processes for Fair Lending and Fair Pricing

Abstract: Current banking data management on loan approval processes has great room for improvements of information quality and prevention of data problems in general, but especially with regards to fair lending and fair pricing practices. We first review briefly typical data collection protocols deployed at many financial institutions for loan approval and loan pricing. Portions of these data ...

Applying CRM in Information Product Pricing

Since information products have unique cost structure and characteristics, namely, high fixed cost and low variable cost, the traditional pricing strategy based on marginal cost theory can not be applied by the producers. This paper indicates a new principle of pricing--customer value (CV) principle. Based on the principle, the producers can execute a number of different pricing strategies to m...

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