Research Of Avoiding Strategic Defaults In Group Lending Of Small And Medium-sized Enterprises Of China

As the influence of small and medium-sized enterprises in national economy of China gradually increases, the development of small and medium-sized enterprises attracts more and more attention of the academic field. However, due to some limitations such as the lack of qualified limitations of collateral and low credit level, small and medium-sized enterprises in China’s credit market are difficult to obtain the vital fund support for their own development, which greatly hindered their expansion. In numerous financing patterns, group lending financing models, which are tailored for small and medium enterprises, are highly welcomed by small and medium-sized enterprises for its unique internal mechanism, solving their financing problems to a great extent. However, with the application of group lending, some disadvantages also gradually exposed. For instance, the problem of strategic default is an important block in the popularization of group lending. Therefore, a reasonable solution for the problem of strategic default is an important guarantee for the continuous functioning of group lending financing patterns.On the basis of analyzing the cause of the problem of strategic default and probing the countermeasures presented in researches home and abroad, a new model of flexible group lending contract is designed in this thesis. The characteristic of this flexible contract lies in that, the group members are motivated to choose the bearable maximum value of joint liability. When partners commit default, the minimum of repayment which the bank can accept becomes the loan value of group members themselves. With the increase of repayment value, the expected revenue of enterprises rises, motivating repaying of enterprises positively and avoiding strategic default to a high limit, which reduces the losses of banks. For medium-sized and small enterprises with medium output levels which are unable to bear complete joint liability in conventional group lending contract, this new type of group lending contract takes the actual repayment abilities of the borrowing enterprises into consideration and motivates their repayment wills effectively. On the basis of numerical analysis which verifies the characteristics and the application scope of this flexible group lending contract, and the further expansion in the double enterprises pattern, the application terms of this flexible contract in the double enterprise pattern is discussed. The domestic researches on the problem of strategic default are mostly theoretical analysis, which barely present specific solutions or countermeasure projects. The research results of this thesis have significant meanings for the solution of strategic default in group lending and the following research.