The Study Of Chinese Bank-Enterprise Credit Behavior Based On Game Theory

Researching on the credit market, most economics literature abroad regards asymmetric information between the banks and the enterprises as a prerequisite of theoretical analysis. Analyzing the results of allocation of credit resources by banks under this premise concluded that asymmetric information will lead to credit rationing .And there is extensive literature on the issues of credit rationing theory and empirical analysis. Credit rationing is one of the results of asymmetric information in conditions of credit market mature and free-floating interest rates on loans. But at present interest is controlled and the credit market is not mature in the circumstances of our country, so the results of asymmetric information usually represent in other ways .Such as the quality of bank credit assets is low ,loans are extended by errors , credit funds are idle , state-owned enterprises have high debt ratio , SMEs have difficulties in financing and so on. In view of the problems that are special in our country's credit market in the period of transition, mainland scholars also try to apply these to the practice of the credit market of our country after studying the theory of western credit behavior.Choosing a suitable angle to study the special credit behaviors of banks and enterprises in the period of transition in our country is difficult. Game theory which recently rises in economic circles is a method which is being used to study strategy when players have direct interaction and how to seeking the strategy equilibrium. In the process of strategy of credit behaviors, game theory has good capability in explaining the decision of behavior of banks and enterprises. This paper begins with the study of feasibility about game theory applying on analyzing the behavior of banks and enterprises, respectively applies the four basic models to the study of credit behaviors of bank sand enterprises. Under their respective assumptions, each bank-enterprise model obtained Nash equilibrium. Each Nash equilibrium of the game between banks and enterprises explained that in the process of game between banks and enterprises they all chose the behaviors to protect their own interests and seek the maximum profit. Although these Nash equilibriums are not all efficient, but game theory provides a powerful analytical tool to analyze the relationship of banks and enterprises.Considering the micromechanics in the process of credit between banks and enterprises, enterprise manager decided whether to apply for a loan ,then bank agent made decisions of whether to approve loans when he saw the loan applications, the process of financing is actually a game between enterprise managers and bank agent. For the existence of enterprise managers' distortions of responsibilities and rights (especially the managers of state-owned enterprises), and the bank agent's distortions of responsibilities and rights led by seeking bribery and other financial corruption, this paper established the model of incomplete information dynamic game between banks and enterprises which includes the distortions of responsibilities and right. Through solving the perfect Bayesian Nash equilibrium, educes three types of equilibriums including separating equilibrium, pooling equilibrium of excessive credit and pooling equilibrium of credit rationing. In conditions of enterprise managers' distortions of responsibilities and rights c≤(1 + i )z, the game between banks and enterprises reach separating equilibrium. Now only good enterprises will apply for loans, so the banks could regard the behavior of applying for loans as a signal to judge the enterprise to be good, ( )π1 = Pθ1 m1 = 1, ( )π0 = Pθ0 m1 = 0, at this point the bank will approve all loan applications. But what should be paid attention to is that in the conditions of separating equilibrium, if the bank agent has larger distortions of responsibilities and rights, then the bank still have to bear certain credit risks. When the enterprise managers have a larger distortions of responsibilities and rights, n1≥cθ0, no matter the enterprise is good or inferior, it is inevitable to apply for loans. The larger distortions of responsibilities and rights of the managers of state-owned enterprises make the enterprises have excessive demand for capital. And compared to SMEs , it could be a lager probability for the bank to consider the enterprise as a good one, when the load application was submitted by a state-owned enterprise. It will lead to the over load to the state-owed enterprise, the pooling equilibrium of exceeded credit, and that caused the accumulation of the bank's bad debts. It is quite obviously that during the process of financing of SEMs, under the circumstance of c < (1 + i )z and when the bank considered the enterprise as a good one in a minor probability, the enterprise's loan application would be approved in no case, the bank will spare loan.At present in our country, because of the factors such as the deficiency of the specific law, the difficulties of enforcing the law, and the highly intangible loss even the poor nature of the transaction of the guaranty, decided the costs of transaction and liquidation is large, and it's difficult for the guaranty to realized, so banks execute soft constraint on enterprises. When the rate of guaranty's realizationρ�'0, it is easy to reach the participation constraints, even if the enterprise has a lower probability of success ,it will apply for loan, so the separating equilibrium will be broken. And the bank agent's distortion of responsibilities and rights, leads to the irrational credit behavior because of which the bank neglects the difficulties of realized the guaranty, and all of these will cause the aggradations of bad debts and the increase of bad assets.Base on the analysis of the credit game model between banks and enterprises ) when the problem comes to the existence of the credit market in our country, it shows the great significance of changing condition of the of bank's and the enterprise's responsibilities and rights to the result of separating equilibrium in the credit market; on the other hand, it is necessary to regulate the strategy in credit behavior between the enterprise and the bank, and to solve the problem of the difficulties of the SMES in financing by bringing innovative institution.