Study On The Operation Mechanism Of Joint-liability Loan Based On Social Capital

Joint-liability loan which is the effective mode of financial operation can effectivelycontrol the risk of SMEs’ loan and help them out of financial difficulties to bedevelopment and growth.As a credit instruments, Joint-liability loan aroused the attentionof world because of its incomparable repayment rate to others loaning model. However,joint-liability loan of our county did not have a good development in the past two decades,and its repayment rate failed to meet expected standards. The main reason is the bankcould not capture the social capital based on our country’s basic national conditions. So itis essential to study social capital affects the joint-liability loan operation mechanism. Thiswill give some guidance to the banks extent the joint-liability in our country.So,we introduce social capital in joint-liability loans for SMEs to analysis therepayment mechanism of joint-liability loans.First, we analysis the intrinsic link of socialcapital and joint-liability loans for SMEs,and we found that social capital is able tofacilitate the enthusiasm of enterprises for repayment of loans.Under this situation, thispaper will establish several gaming models including the bank-team model and thatbetween different enterprises within the team.we introduce the output level of theteam,social rewards and punishments and repayment constraint, to further analysis internalmechanism of social capital to improve repayment rates.Based on the research conducted,social capital is reported to be able to stimulate the growth of production of these teamsand guarantee the repayment of teams after the gradual removal of continuous loanmotivation, besides, the social reward and repayment restriction will motivate theproactive repayment of enterprises or help enterprises in poor situations to repay the loansthus to improve the repayment rate of joint-liability loans.As a result, under the situation of joint-liability loans for domestic SMEs, any otherrelated condition should be prepared to fully take advantage of social capital so as torealize the objective for the real support and development of SMEs.