A Study On Repayment Incentive Mechanism For Small&Micro Enterprise Group Lending In China

Since it was put forward in Bangladesh1976, group lending has been widelypromoted through out the world, many country used this model to solve financingproblem for smallµ enterprises. In1999, group lending was introduced to ourcountry and has been developed rapidly. In2011, the concept “small microenterprise” was put forward, and then “small micro enterprises group lending” wasborn. Though group lending played an important role, it has became a severelyafflicted area of non-perfoming loans since2013. The events of default for grouplending has attracted extensive attention. How to improve the repayment rate of grouplending has became a problem that is urgently need to be solved.Based on this consideration, we will study the effectiveness of repaymentincentive mechanism for small micro enterprises group lending. In the existingresearch, it usually studys the repayment incentive factors through a specific case, oruse the Game Theory to study the reimburse mechanism. We combine these twomethods here, first we take advantage of the Game Theory to research the reimbursemechanism, then we study the effectiveness of repayment incentive factors andconfirm that the reimburse mechanism we put forwad is effective based on aquestionnaire investigation of470small micro enterprises in GuangZhou.Finally, wegive some practical advice to banks and small micro enterprises, according to theconclusions in this paper.