Research On Interests Coordination And Incentive Mechanism Between Banks And Enterprises Based On Game Theory

Both of Banks and enterprises are important entities in our economic society and they play important roles in credit funds-circulation system. Coordination management between members in credit funds-circulation system goes throughout the entire life cycle of credit funds-circulation system. The effect of coordination management is related to the stability and vitality of the cooperation relationship in credit funds-circulation. Credit funds-circulation system is based on Interest conflict – Cooperation – Coordination Mechanism. Coordination contributes to successful operation in credit funds circulation system. Therefore, this paper tries to research on Interests Coordination and Incentive Mechanism Between Banks and enterprises Based on Game Theory.This article has used the method of a great deal of theories, such as game theory, operation theory, statistics, differential mathematics and principal-agent theory, conducted in-depth study on coordination mechanism between banks and enterprises, incentive mechanism and third-party participation mechanism of the credit funds-circulation system. Through researching on literature and using risk map tool, it found the factors that lead to interest imbalance between banks and enterprises. In addition, on the circumstance of that banks risk averse, enterprises will be difficult to obtain financial support. Through modeling logistic risk prediction, it analyzed cases to identify the factors of interest imbalance between banks and enterprises. Then, it discussed the issue of interest coordination in the credit funds-circulation system between banks and enterprises. In the case of information asymmetry for both sides, a model has been established to cope with the situation, which can motivate enterprises indicate their corporate finance accurately and encourage banks to maximize credit funds supply. Therefore, Interest coordination between banks and enterprises can be achieved. Meanwhile, banks should pay attention to both forward credit funds circulation system and reverse credit funds circulation system. Then it studied incentive mechanism of credit funds circulation system in the condition of banks cooperation. Through conducting Stackelberg differential game model, it analyzed the issue of alliance in regional banks with purpose of achieving benefit-sharing. With the regional banks cooperation, the probability of enterprises default declines and the penalty costs of enterprises default decrease. Therefore, the enterprises will honor their agreement. Simultaneously, Benefit-sharing mechanism provides optimal financing strategies for both superior and inferior players and solves the problem related to banks cooperation stability.Based on the game between banks and enterprises, it introduced third-party as a game party. In the model with third-party credit enhancement mechanism, we designed the sharing proportion of credit enhancement cost between banks and SMEs and established feasible boundary for credit enhancement operation model. The result indicates that the borrowers’ commitment to the enhancement costs-sharing realizes Pareto improvement of both banks’ and enterprises’ return. And if enterprises bear all costs, system return can be maximized. The research concluded that the credit revolving model’s return can be optimized through reasonable apportionment of the credit enhancement costs. In the SMEs’ revolving credit, the scale of credit funds from banks to SMEs is restricted by the banks’ funds resources. This research established an incentive game model between bank and third-party by introducing third-party organization and providing bank with deposits. It indicated the relationship of the third parties’ effort, operation ability, incentive factors of banks and return variation of both banks and enterprises.The research constructed credit funds circulation game model between banks and enterprises by introducing government as a constraint role. Based on this model, positive incentive, negative incentive and mixed incentive model has been established. After it analyzed affects of the incentive mode between banks and enterprises, it can be concluded that in the condition of mutual effect of incentive factor and operational constraints factor, the optimal solution for government who wants to receive the highest expected return is to choice the contract that combines the incentives and Operational constraints. With this optimal contract, banks would adopt cooperative attitude and increase the loan funds for small and medium-sized enterprises in order to realize the integral coordination on the interest between government and banks. This research analyzed the effect of interest by undertaking and refusing the extended responsibility of banks in the credit cycle system. In the six decision-making environments, social and economical return of the whole system in the condition of undertaking extended responsibility would be greater than that in the condition of refusing responsibility. The return of banks that undertake extended responsibility is greater than that of non-bank financial institutions that undertake extended responsibility. The system return will be optimized while undertaking extended responsibility in integrated decision. Pareto improvement of participants’ economical returns and the coordination of all game parties could be realized by interest rate conduction.