Game Analysis On The Debt-to-Equity Swap In China’s Banks

In recent years,China’s commercial banks,the proportion of non-performing loans rising,enterprises generally exist high debt ratio phenomenon,which implies a certain risk.Debt-to-equity swap is considered to be a way to solve the double dilemma of corporate high debt and high bank bad loans.However,in the implementation process,the debt-equity swap involves multiparty(such as:commercial banks,asset management companies,enterprises,etc.)there are conflicts of interest,resulting in enterprises and banks to solve high debt and high non-performing loans inefficient.This paper analyzes the four problems from the implementation of debt-to-equity swap in China: Lacking of market-oriented operation,the lack of market-oriented operation,the poor management of equity management companies,and the lack of equity withdrawal mechanism.For these problems,mainly in the process of implementation of debt-equity swap,due to the existence of information asymmetry among the main body is more serious,banks,asset management companies,enterprises there are adverse selection problems and moral hazard.This paper analyzes the interest and game relationship of the bank’s nonperforming loan-to-equity swap by using the game theory method,and uses the bid-ask auction model to analyze the game of the non-performing loan pricing between the bank and the asset management company,and obtains the bank and the asset management company.And constructs the signal game model to analyze the game between the bank and the enterprise whether to convert the creditor’s rights into the equity,so as to obtain the condition and benefit of the debt-to-equity swap between the bank and the enterprise.Finally,from four aspects of a reasonable,applicable policy recommendations.First,improve the access mechanism for debt-to-equity swap,specify the scope of use of debt-to-equity swap.Second,adhere to the market-oriented debt-equity swap,in the main body,trading billion,pricing mechanism,transfer enterprise management and other aspects to follow the rules of the market.Third,strengthen the management of asset management companies.Fourth,improve the mechanism of equity withdrawal,to ensure that debt-to-equity swap in the lever and adjust the structure can play an effective role.