Study Of The Incentives For Listed Companies Offering Credit Guarantees

Offering credit guarantees is a normal economic behavior. However there are a series of problems in the behavior in China in recent years. Even though it has been administerd for more than ten years, it also has many serious violations which are more and more hidden. At the same time, there is no answer to the question that why the companies volunteer to offer credit guarantees at the cost of their own benefits. So it is meaningful to explore the incentives for listed companies offering credit guarantees.Starting from the current problems of offering credit guarantees in China, we do a cost-benefit analysis of it. We found that the list companies making the decision whether to offer credit guarantees to the non-related parties or not is based on the principle of cost-benefit. However, as regards to offering credit guarantees to the related parties, it is normal and necessary when there is good risk control. On the contrary, offering credit guarantees with risk beyond the affordability of its own realized the private benefits of control for the controlling shareholders. That is in line with the principle of cost-benefit from the perspective of controlling shareholders. Therefore, the difference between the cost and the benefit is the fundamental incentive that induces decision-makers decides to offer credit guarantees.On the basis of incentives explored, this article put forward countermeasures and suggestions, hoping to contribute to the solution of the problem of governing the credit guarantees offering in China.