Mathematical Model of Dynamic Games of Imperfect Agency--Based on Conspiracy of SMEs and Bank Managers
Abstract: In China, state-owned commercial banks have monopoly position on the banking loan market. This paper constructs a two-stage dynamic game model to analyze the conspiracy in decision-making of bank loans, based on the establishment of relationship lend between SMEs and managers in large banks. Results indicate the existence of an optimal equilibrium as the solution of conspiracy. A revised mathematical model analysis with relaxed assumption shows that: if the state-owned banks have the mastery of large amounts of capital, supervision of SMEs lending are weak, and bank manager has the control of complete information of enterprises, the conspiracy tendencies for both parties will be more obvious. The conspiracy based on relationship lends between banks and enterprises will greatly damage the interests of banks and extrude high-quality SMEs.
Key words: Mathematical Model; Dynamic Game; Conspiracy;Relationship Lend
J. Stigliz, & A. Weiss (1981). Credit rationing in markets with imperfect information. American Economic Review, 71(1), 393-410.
D. Diamond (1991). Monitoring and reputation: The choice between bank loans and directly placed debt. Journal of Political Economy, 99(2), 688-721.
M. Berger (1995). The profit-structure relationship in banking-tests of market-power and ecient-structure hypotheses. Journal of Money's Credit
and Banking, 27(3),404-431.
A. Boot (2000). Relationship banking: what do we know?. Journal of Financial Intermediation, 9(1), 7-25.
R. Elsas, F. Heinemann, & M. Tyrell (2004). Multiple but Asymmetric Bank Financing: The case of relationship lending. Munich: CESifo Group No.1251.
X. Freixas, & C. Holthausen (2005). Interbank Market Integration Under Asymmetric Information. Working paper, Department of Economics and Business, G15,G20, F36.
P. Angelini, R. Di Salvo & G. Ferri (1998). Availability and cost of credit for small businesses: Customer relationships and credit cooperatives. Journal of
Banking & Finance, 22(2), 925-954.
A. N. Berger, & G. F. Udell (2002). Small business credit availability and relationship lending: The importance of bank organisational structure.Economic Journal, 112 (4), 32-53.
A. N. Berger, & G. F. Udell (2006). A more complete conceptual framework for SME nance. Journal of Banking & Finance, 30(11), 2945-2966.
- There are currently no refbacks.
If you have already registered in Journal A and plan to submit article(s) to Journal B, please click the CATEGORIES, or JOURNALS A-Z on the right side of the "HOME".
We only use the follwoing mailboxes to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases:
Copyright © 2010 Canadian Research & Development Center of Sciences and Cultures
Address: 730, 77e AV, Laval, Quebec, Canada H7V 4A8
Telephone: 1-514-558 6138
E-mail:firstname.lastname@example.org email@example.com firstname.lastname@example.org