Information Asymmetry And Credit Risk

Along with the development of the financial integration in global and china' s WTO entry, the banking of China will faces more stormy competition. For improving the competitive power of commercial banks , the problem of the huge amount of non - performing banking assets in China must be solved at first. Key to preventing new non - performing loans is to pull credit risk down.Adverse selection and moral hazard caused by information asymmetry are the deep - seated reasons why credit risk grows ever more. By applying the Game theory and theories correlative with Economics of Information, this study analyzes the relationship between information asymmetry and credit risk. Further more, connecting the actual condition of our country, this study analyzes information asymmetry among the government, commercial banks and enterprises, as well as credit risk caused by it. At last, the measure is brought which to dent and erase triangular information asymmetry and credit risk .