Smes' Group Lending Pricing From Incentive-compatible Perspective

With the deep promotion of the Supply-side Structural Reform in China and the idea ofbuilding Inclusive Financial system,the contribution of Small and Medium Enterprises(SMEs)to the national economy is becoming more and more prominent.However,the development of SMEs is very difficult.As we all know,the difficulty in obtaining loans is a main problem for a huge number of SMEs to keep growing.In addition,under the market-oriented interest rate environment,the banks bear double pressure of interest margin tightening and bad loans surging,so banks are increasingly cautious about SMEs lending business.How to resolve the contradiction between suppliers and demanders of funds and tackle the financing problem of SMEs has become an important issue related to the healthy development of national economy.Group lending has provided inspiration and reflection to solve the dilemma between banks and SMEs.Over the past few years,the banks in China have launched a variety of SMEs group lending products.However,in practice,group lending also show a failed side.In recent years,mutual insurance crisis frequently happens in Jiangsu and Zhejiang areas,group lending changes from “ Safety Lock” to “Blasting Fuse”.Group loan risk gradually exposes,banks gradually tighten the SMEs lending business.Therefore,in this context,under the incentive-compatible perspective,this paper investigates group lending pricing of SMEs to provide a new method to solve the current dilemma between banks and SMEs.First of all,this paper defines the relevant concepts,explores the classification of China's SMEs group lending,operating mechanism and development status.Secondly,by using the Backward Induction method,the paper studies the game behavior between the SMEs in the three stages of the loan process,so as to determine the optimal joint liability,lay the foundation for the following pricing research.Then,this paper studies the game behavior between SMEs group and the bank,this paper has analyzed the risk-sharing mechanism and pricing of two group lending modes.This paper also empirically tests the model,and carries on the sensitivity analysis of important parameters to verify the stability and the accuracy of this pricing model.The main contributions of this paper are: Firstly,the quantification analysis of the optimal joint liability among the members of the group in the pricing process reduces the possibility of the default of the SME group,and avoids the crisis of mutual insurance to a certain extent.Secondly,based on the optimal joint liability,this paper establishes the dynamic lending rate pricing model with reward and punishment mechanism in two modesunder the perspective of incentive and compatibility.The pricing model can not only reduces the credit risk of commercial banks' default risk,but also make positive incentives for SMEs to repay actively.The study enriches the theory of SME group loan pricing,and provides theoretical reference and data support for China's commercial banks to develop SMEs group loan business.