Mechanism Design Of Mortgage Guaranteed Loan On The Engineering Machinery Supply Chain

With the rapid development of Chinese engineering machinery market and the improvement of Chinese credit system, more and more engineering machinery manufacturers prefer to be paid by mortgage guaranteed loan, and which have accounted for 30%. Carrying out mortgage guaranteed loan not only can solve the financial problem of the downstream buyers and increase the sale volumes of the manufacturers, but also can relieve the information asymmetry between the bank and the borrowing enterprises and stimulate the bank's lending enthusiasm. But the risk level of the total mortgage guaranteed loan is increasing because of the 2008 global financial crisis and the drastic price fluctuation of the raw material represented by steel material.We firstly described the definition and the process of the mortgage guaranteed loan, and analyzed the advantages and the risks of carrying out the mortgage guaranteed loan. Then we developed a Principal–Agent Model in the market which was decided by single side and a Stackelberg Game Model in the market which was decided by both sides, so as to analyze the optimal credit decision-making mechanism under complete information. By comparing the optimal contract solutions in the market decided by single side and the market decided by both sides under complete information from the aspect of market behavior and market performance, it concluded that the bank could ask the manufacturer to give up the right of formulating the credit contract by compensating the manufacturer'loss, so as to achieve win-win progress. Then we analyzed how to use the manufacturer's risk-taking ratio to identify the risk types of the downstream borrowing buyers under asymmetry information. So we developed an Information Screening Model in the market decided by single side, and pointed out that the contract design which took the credit rate and the risk-taking ratio as main contents was effective. In addition, we developed an Information Signaling Model in the market decided by both sides, and obtained the pooling equilibrium and the separating equilibrium. By comparing the optimal contract solutions in the market decided by single side and the market decided by both sides under asymmetry information from the aspect of market behavior and market performance, it concluded that from the aspect of the bank, the market decided by single side was better than the market decided by both sides, but from the aspect of the manufacturer, the market decided by both sides was better than the market decided by single side.We hope the results of this paper can provide the theoretical foundation for carrying out the mortgage guaranteed loan, and provide effective references for the improvement of the mortgage guaranteed loan and the development of the engineering machinery market.