Study On Bank Sequential Loan In China

Aimed at the problem of information asymmetry between bank and mid-small scale enterprise, sequential bank loans had been put forward in China to settle this difficult problem. Based on the relationship loans, cycling loans and the incumbent bank system, sequential bank loans were along the time axis to demonstrate the loan date from China' commercial bank, to testify the bank can use the sequential bank loan relationship to solve the problem of information asymmetry between bank and mid-small scale enterprise. The paper referenced Athavale and Edmister (2004) ' model which put forwards through the date from USA. Parameter and framework were been adjusted and regulated according to the China.Based on the sequential bank loans, the inside information can be picked up by bank through the period of application for loans, the process of monitor or supervise the enterprise and the usage of financing. Then, the reality, credibility news would been utilized to poop the information asymmetry problem. The worth of sequential bank loan relationship has been demonstrated by the date. The paper analysis separately the importance through the relatively means and the absolute means.Paper investigated a series of loan-rate made by incumbent bank to the same finance enterprise and showed that information advantage was distinctness to the incumbent bank and can influence the pricing of second loan to the same enterprise rapidly. The sequential loan-rate is a set of degressive numerical value. Further, the balance is also a set of degressive numerical value. The worth of information advantage was been shared by the incumbent bank and the enterprise according to the credit elasticity respectively. If the bank has a little credit elasticity, it would take a majority of income; if the enterprise has a little credit elasticity, it would take a majority of income.