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Credit Rationing and the Simulation of Multi-bank Credit Market Model: A Computational Economics Approach

Author

Listed:
  • Yu Zhang

    (Tianjin University)

  • Xiong Xiong

    (Tianjin University
    Tianjin University)

  • Wei Zhang

    (Tianjin University
    Tianjin University)

  • Xuefeng Liu

    (Nankai University)

Abstract

Using a platform provided by computational economics, we set up a simulation model on agents in artificial credit markets. We simulate credit transactions using debt contracts between firms and banks on different types of projects in different supervisory environments. Based on the results, we describe the overall features and rules of the multi-bank market. We find that the total amount of loans granted by banks to relationship firms is always more than that granted to non-relationship firms. Furthermore, the relationship between enterprises and banks can ease the financing difficulty of small- and medium-sized firms. From the social perspective, better relationships between banks and enterprises can promote economic growth. However, from the bank perspective, relationship lending does not improve profits.

Suggested Citation

  • Yu Zhang & Xiong Xiong & Wei Zhang & Xuefeng Liu, 2018. "Credit Rationing and the Simulation of Multi-bank Credit Market Model: A Computational Economics Approach," Computational Economics, Springer;Society for Computational Economics, vol. 52(4), pages 1233-1256, December.
    • Handle: RePEc:kap:compec:v:52:y:2018:i:4:d:10.1007_s10614-017-9726-0
    DOI: 10.1007/s10614-017-9726-0
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    References listed on IDEAS

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