Research On The Web Cooperative Credit Guarantee Loans Of Commercial Banks

Small businesses have played an important role in driving economic growth, prospering the market, solving the employment, transferring rural labor and technological innovation, small businesses are important drivers for economic growth and are playing a very important role in economic life. However, the development of small businesses is constrained by the capital scale, credit loans and financing business is the major financing channels for small businesses, but banks are usually reluctant to make loans to small business. Difficult for small businesses to obtain bank loans, mainly because that the amount of information between banks and businesses is asymmetry. This phenomenon is rooted in adverse selection and moral hazard information caused by asymmetry between banks and businesses. In order to reduce information asymmetry caused by moral hazard, banks require the business to provide something given as security for a loan when receiving small business loans application. The bank will dispose collateral to guarantee the loan security when the business breaks the contract. But small businesses are often lack of fixed position, no collateral or the collateral is insufficient to meet their financing needs, there will be the status of small business financing difficulties. Therefore, the urgent task on hand is to explore a loan products which are consistent with the characteristics of the financing needs of small business without collateral guarantee are the solution to the problem of financing small business. Developing small business loan has a huge market with big potential and wide prospects and has advantages in optimizing credit structure, spreading credit risk and increasing the revenue of banks.As e-commerce development in China, more and more small businesses were turning to e-commerce markets, were developing the sale of commodities activities in the network platform., that also contributed to the prosperity of third-party e-commerce platform. The third-party e-commerce platform is intermediary services organizations, designed for serving both on the network in trading goods and services, small businesses have limited capital and technical strength, so to develop e-commerce through third-party e-commerce platform instead of self-built e-commerce platform is a wise move. As more and more small businesses began to use third-party e-commerce platform, the third-party e-commerce platform quickly gathered a great deal of popularity, it also attracted the attention of the bank, bank fancy a third-party platform because of the large mass market client resources, the third-party platform also hope that through co-operation with banks on the network will provide loan financing services to Internet Businessman. That will beneficial to solve the financial bottlenecks of Internet Businessman. That will also beneficial to smooth trading activities to internet businessman, which will attract more users and enhance the number of users and quality of the third-party platform.As a loan financing service platform, The Industrial and Commercial Bank of China and the China Construction Bank together with Alibaba which is a third-party e-commerce platform launched "Ali loans". Alibaba is the best-known third-party e-commerce platform in China, Ali loans offered many species of loan, including the Web Cooperative Credit Guarantee loans, mortgage loans, secured loans, orders financing and net credit loans. we chose the Web Cooperative Credit Guarantee loans of Ali loans as a case description because Alibaba initiated the Web Cooperative Credit Guarantee loans in the world and its a representative; and because that Alibaba is the most outstanding third-party e-commerce platform services to medium-sized and small businesses, Alibaba case study also have represented significance of small business issues.In this paper, we should focus on the analysis of the Web Cooperative Credit Guarantee loans which is defined as three or more companies formed an alliance through the network platform to jointly apply for loans to banks, while risk-sharing between companies. When a member of the alliance can not repay the loan, the others need to pay off jointly principal and interest of his loan. The legal representative of the enterprises take personal unlimited liability if the business is unable to return the loan principal and interest, he will take security responsibility by all the property (including the family property).The characteristics of the network guaranteed loans include:(1)Highlight the characteristics of the network, the lending process flow and networking; (2) Do not need provide collateral, which overcome the deficiencies that small businesses no collateral or insufficient collateral, the risk-sharing among applicants for loans let members inspected each other’s strengths and assets, through peer review among enterprises that could reduce the degree of information asymmetry between banks and enterprises; (3) Network credit records can also serve as a reference standard for bank loans; (4) The Government, banks and third-party platform to build a "risk pool" to resist the risk of loss; (5) To disclose the information of the breaching party of contract companies on internet, and increase the corporate default costs; (6) Implement dual-inspection mode of "inter-enterprise self-study plus bank inspect on the spot", reducing the loan risk.This paper use game theory analysis to analyze the effect of the Web Cooperative Credit Guarantee loans. This paper built two game models, and that there is a correlation between the two models, so we also called them association game model. These are two models, one is a game between a bank and the whole alliance, and the other is the static game among alliance internal. In the first model, we regard whole alliance as one party in game because that the loan application is made by the whole alliance, then the bank will review the whole alliance, if one of the alliance does not meet the conditions of the loan application, the loan will fail, after loan extension, the members of the alliance will assume joint guarantees responsibilities if other members break a contract. Therefore, we can regard alliance as a whole from applying for a loan to repaying the loan. This model is a dynamic game model, in a series of assumptions, constructs a game tree, establish a dynamic game model between bank and alliance, form a concept inductively by backward induction:the optimal strategy for small businesses is applying for the Web Cooperative Credit Guarantee loans and repaying the loan on time, the bank’s optimal strategy is to agree to the loan to the applications of alliance. Then, in the second model, establish a static game model within the alliance, it is mainly because in this mode, the members of the alliance take joint liability to the other members’ loan, so it is necessary to analyze the relationship within members in alliance, through the analysis about the payoff matrix vector, we come to a conclusion about the optimal choice under different punishment.Through the derivation of these two models, we can draw the following conclusions:Associated game mode in the absence of guaranteed loans directly to enhance the degree of symmetry of information between banks and small business under the conditions to solve the adverse selection and moral hazard issues, effective management of the loans under asymmetric information in opportunistic behavior to achieve a credit the market separating equilibrium, so that broke the credit market under asymmetric information on the plight of the failure. Whether a company will choose to break a contract depends largely on the degree of social penalties to the breach. The model shortcomings is the model based on a series of assumptions, but in real life, there is still inconsistent with the hypothetical situation, so we need to improve the model guidance with realistic.At last, this paper put forward recommendations about developing the Web Cooperative Credit Guarantee loans to the banks, third-party e-commerce platform, and the Government. For banks, it is necessary to strengthen risk prevention awareness, implementation of risk management accountability, implementation of life-long risk responsibility, loan officers will be granted loan principals and interests all his lifelong, let loan officer’s income linking the recycling of the principal and interest of loans; for the third-party e-commerce platform, it need to strength the penalty to network information disclosure against the "contract breaching", it need to further improve the information platform, it need to effective use mass data, and it need to develop web information mining technology to let the lending market achieve more precise; for the government, they need to introduce competition mechanism, enable more banks and more third-party e-commerce platforms take part in the Web Cooperative Credit Guarantee loans to provide better loan services to small businesses. Implement an open Cooperative Credit Guarantee to avoid the collective risk of default.In this paper, we used standardized research method combined case studies method. In the writing process, we mainly use game models and game analysis to demonstrate that the Web Cooperative Credit Guarantee loans has advantages to the financing problems of small business loans and the key to the success of this model, at last we came to the conclusion to replicate the model for future proposals.Innovations of this article include:First, topics innovation, this paper studies the Web Cooperative Credit Guarantee loans which is a new emerging mode, this loan mode first initiated by Alibaba in 2008, so the mode just exist only a short time and there are no such loans mode abroad, so Chinese scholars have not been systematic studies this modes so far, now there is just a small amount of literature on a brief introduction to this mode, this paper first systematic, comprehensive and detailed analysis of this kinds of modes, titles selected for this paper is innovative. Second, the analysis perspective innovation, combine traditional financial lending business with the emerging third-party e-commerce platform is innovative which embodies both tradition and modernity. Third, This paper introduce the specific model to analyze the Web Cooperative Credit Guarantee loans of the association game, by constructing two separate but interrelated models. The shortcoming of this paper is that the Web Cooperative Credit Guarantee loans mode has just started on the domestic. There is no precedent in the international community, its coverage of international and domestic is almost from the introduction and rarely involves the theoretical analysis, because of References are limited, the theoretical basis of this article is not very perfect, the depth of analysis is not enough, and the collection of data are also weaknesses.