A Research On G2B Information Sharing To Support Decision Making For SME Lending By Banks

Information asymmetry is the root cause of credit rationing as well as small and mediumenterprises (SMEs) financing difficulties. Because the "soft information" of SME is difficult to bemeasured, classified, transferred, and testified, it can't be recognized correctly by banks. Therefore inpractice, SME suffers from credit rationing. Foreign scholars have demonstrated that more timely "hardinformation" to some extent can compensate for the deficiencies of "soft information" and reverse thedisadvantage of SME in bank lending decision. In China, a great amount of enterprise creditinformation gathered by the government departments has been incorporated into Basic Database ofEnterprise Credit Information of the People's Bank of China in order to realize the G2B informationsharing. How will that affect the lending decision making of banks to small and medium enterprises? Ithas not been determined. Therefore, this research explored the decision support method of G2B sharinginformation for bank lending to SME and how to promote its adoption, in order to find the value ofG2B information sharing and its enhancement in decision making of SME loans.On the basis of Credit Information Database of the People's Bank of China, a series of problemsof G2B inter-organizational information sharing are studied in the dissertation. The main research clueis as follows, theoretical analysis on decision support of G2B information sharing for bank lending toSME→analysis on influential factors of G2B information sharing on decision support of SME loans→research on trust formation in credit reporting system→research on trust transfer in credit reportingsystem→research on elaboration likelihood of G2B sharing information in bank lending to SME.The main work and conclusions of the study are listed as follows.(1) Theoretical analysis on decision support of G2B information sharing for bank lending to SMEs.Firstly, the paper introduced the theoretical foundations of G2B information sharing support for thedecision of SME loans. Secondly, we discussed the functional mechanism and methodological basis ofshared G2B information as the third-party proof. Thirdly, based on the decision criteria of banks' SMElending and the demonstrative correlations between government information and these decision criteria,we proposed main criteria of shared G2B information decision support for bank lending to SMEs.Finally, we used the information integration algorithm to analyze cases of G2B decision support, basedon which we discovered the effectiveness and categorizing effects of G2B information on the SMElending decision.(2)Analysis on influential factors of G2B information sharing on decision support of SME loans.Relevant decision-makers of bank lending to SME are interviewed22times within28months. The interviews were centered on four aspects: factors of decision making, influential factors of decisionsupport based on shared G2B information, influential factors of information quality and sourcecredibility evaluation on credit reporting system. These interviews confirmed the usefulness of sharedG2B information, discussed influential factors of G2B information sharing on decision support of SMEloans and the influencing mechanism, which lays the foundation for later empirical studies.(3) Research on trust formation in credit reporting system. Based on the interviews, trustformation theory and the relationship between sub-constructs of social capital, the paper established thecomprehensive model of trust formation.209questionnaires were collected from30banks in sevencities/provinces in China including Beijing, Shanghai, Jiangsu, Henan, Shanxi, Shandong, Chongqing.The data is analyzed using methods for integrating mediation and moderation effects. The researchfinds out perceived reputation and perceived capability of peripheral route formation plays a significantrole in credit formation while the moderating effect of shared vision and shared language is significant.Among them, the higher shared vision will lead to a better role of perceived reputation played in theprocess of establishing trust on information sources, and shared language can let credit reportingplatform to as one way of information collection and treatment, and thus reduce the correlation ofperceived capability and source credibility. To be specific, common domain knowledge is to enhanceour ability to judge, so that based on the performance of credit reporting platform we can determine thelevel of information source, which leads to the perception of source credibility. In this way, suggestionis given to the process of building credit reporting system for multi-source communication andexchange of information and system standardization accordingly. Based on previous results, weprovide suggestions on how to facilitate the communication of among multiple information sourceswithin a credit reporting system.(4) Research on trust transfer in credit reporting system. Based on the interview and the theory oftrust transfer and evaluation of information quality, the paper established the trust transfer model ofcredit reporting system. We conducted empirical study in8cities/provinces including Beijing,Shanghai, Jiangsu, Henan, Shanxi, Shandong, Chongqing, Zhejiang with262valid questionnairesusing the method of testing the multiple mediation effects. The result shows that there are two ways fortrust to be transferred to perceived information quality from source credibility; one is directly throughinformation source entities, the other is through credit reporting platform (indirect transfer). Indirecttransfer accumulates credit through information source on the credit reporting platform, and ismanifested by its completeness, correctness, timeliness, and facilitates the adoption of shared G2Binformation. Under inter-organizational information sharing, correlation recognition did not show a significant role on credit accumulation due to the lack of information recognition and common culturalbackground. Based on the research, advice is given accordingly to facilitate the evaluation andimproving of information quality in credit reporting system.(5) Research on elaboration of G2B sharing information in bank lending to SME. Based on theprevious research on dual-processing, elaboration likelihood model, and relevant interview, the studyestablished ELM model Development of G2B Sharing Information Adoption. The research studied theinformation sharing elaboration likelihood model for small and medium enterprise loans by collecting175valid questionnaires from28banks in7cities/provinces including Shanghai, Beijing, Shandong,Chongqing, Jiangsu, Henan, Shanxi using the method of testing the mediation effects and moderationeffects. The research finds out that control opportunity of tracking as the opportunity factor for thelikelihood of elaboration, adjusts the effect of heuristic system, which has not been touched upon byprevious research because control opportunity of tracking is a feature characterized by credit reportingsystem along with inter-organization information sharing environment. Besides, control opportunity oftracking has no effect on regulation based analytical system. The following interview for exploring itsreasons show that the "recognition prudence" and information scarcity might explain that. Last, thestudy discussed the six aspects of influencing control opportunity of tracking, which lays theoreticalfoundation for proposing management suggestions.The innovative points are summarized as follows.First, this research proposed a new way to deal with information asymmetry problem underlyingSME. Although Klein (1992), Padilla and Pagano (1997) and Bennardo et al.(2007) has confirms theeffectiveness of information sharing in solving information asymmetry problem, it only focuses oninformation sharing among banks. This paper proposes a brand-new angle to deal with informationasymmetry, G2B information sharing. By integrating current theories and literatures, we propose forthe first time the multi-source information fusion of government and bank as well as the demonstrativecorrelations between shared G2B information and bank information, and conducted empirical researchby using case-studies. This research has discovered three important forms of decision support, whichare warnings of critical risks, as supplemental information and cross demonstrating.Second, this research discovered shared vision facilitates trust formation and shared languagepromotes objective assessment of source credibility. Lu and Yang (2011) only discovers that raising thecognitive capital will affect trust relations in information exchange but fails to identify how to affect.This research classified cognitive capital as shared language and shared value, and established trustformation model. The study finds out that shared language has a negative moderation effects and shared vision has a positive moderation effects. So to construct information sharing platform, it needsto enhance contact of different parties and develop shared vision and shared language.Third, this research confirmed the bridging effects of information infomediaries during trusttransfer and its transmitting mechanism. In the research of Bri ol and Petty (2003) and Petty and Bri(2006), the source credibility and perceived information quality largely have competitive relations inknowledge sharing. From the perspective of trust transfer in information infomediaries, this paperanalyzed the inter-dependent relations of the two. Additionally, this research confirms that informationinfomediaries, as an institutional structure context, has fundamental and bridging effects during trusttransfer. The results show that if high technology and efficient mechanism design can ensure the stronginstitutional structure, the information source credit will show its positive influence on the transfer ofinformation quality.Fourth, this research proposed new elaboration likelihood elements of information adoption underinter-organizaitonal information sharing circumstances and demonstrated its moderation effects toinformation usefulness. Sussman and Siegal (2003) and Bhattacherjee and Stanford (2006) largelyfocused on knowledge (K) and motivation (M) elements of KMO model. In this paper we proposed anew element as opportunity (O) in information sharing, control opportunity of tracking, which includesinformation transmission and comprehension barriers. This is a new element which was not identifiedby previous research, because control opportunity of tracking is based on demonstrative correlationsbetween multi-source information in the context where multiple departments and organizations sharedinformation, and tracking controllability is also unique for information fusion system. Our researchdiscovers that control opportunity of tracking can negatively moderats the functional strength ofheuristic system and weakens the influence of peripheral route. It can be inferred that because ofinformation transfer and understanding obstacle, whether information intermediary platform canprovide more clues for users to process (greater possibility for control opportunity of tracking), whichis the key to analyze the likelihood of elaboration under inter-organizational information sharing.