Management Research On The Pattern Of Lending And Repaying Loan For Smes Based On Information Asymmetry By Commercial Banks

Small and medium-sized enterprises (SMEs) are the base of our real economy which play a significant role in our economic structure. However, difficulties in financing limit SMEs’ development and growth for a long time. In recent years, as macro-economy goes downward, SMEs struggle more in sustainable development. On the other hand, due to factors, such as internet finance rapid rise, admission of private banks and interest rates liberalization, traditional commercial banks encounter serious competition for survival. Upon this situation, it will be another efficient way for commercial banks to involve in SMEs lending business for more competitiveness. What’s more, it will be a good opportunity for SMEs to solve financing problems.This paper first analyses the difficulties in SMEs financing as a bank manager, and then explains the reasons of credit rationing mainly from information asymmetry and banks’ inner risk management perspective. It finds out that credit rationing has root in banks’ limitations of adjusting proper risk management according to characteristics of different SMEs in time. As result, this paper concentrates on encouraging banks to build an efficient way for information communication without barriers.This paper then compares researches and facts domestic and overseas. Combined with existing two lending-and-repaying patterns and actual financing situation, it gives out a brand new pattern which is "incremental lending and amortization ". Flexible selection among lending-and-repaying patterns improves bank’s capacities to deal with larger credit groups of customers, which can also provide better risk management, and decrease the cost of regulation. So, this paper hopes to assess the feasibility of transferring bank’s role as a before-loan supervisor to a middle- or after-loan supervisor by constructing a unhindered channel for information communication.The paper models three lending-and-repaying patterns, using computational experiment to simulate mutual actions between SMEs and commercial banks, respectively calculating return rate and utility of banks. After experiment, the result concludes that "incremental lending and amortization" is suited to SMEs which anxiously need loan support but are in unstable operation or have unclear repaying abilities. This pattern can effectively limit the risk exposure while expand customers. "Whole lending and amortization" is suited to SMEs which have solid foundations or have a strong relationship with banks, which can meet the customers’needs to the greatest extend, strengthening customers’ loyalty. "Whole lending and repaying" has no obvious advantages comparing with previous two patterns. Finally, the paper points out practical significance of applying flexible lending-and-repaying patterns by commercial banks.