New loan pricing model boosts bank resilience and customer benefits.
The researchers developed a new way for banks to set loan prices for small businesses. They looked at how loans are connected and how each loan affects the overall risk of the bank. By using this new method, banks can offer lower interest rates to customers with good credit and higher rates to those with bad credit. This helps banks make more money while also being better prepared for financial risks. The study shows that this approach can lead to higher profits and stronger financial stability for banks.