IDEAS home Printed from https://ideas.repec.org/a/mes/chinec/v53y2020i3p285-299.html
   My bibliography  Save this article

In Search of the Best Interest Rate for Group Lending: Toward a Win–Win Solution for SMEs and Commercial Banks in China

Author

Listed:
  • Qin Shang
  • Zhenzhong Ma
  • Xueyang Wang

Abstract

To better help resolve the dilemma of more demand for bank lending and increasing defaulted bank loans, this paper develops a pricing model on SMEs’ group lending practice using a gaming method. The optimization method and the game analysis are used to model the dynamical interest rates of group lending in order to maximize the profits for SMEs and to guarantee basic income for commercial banks. A simulated empirical analysis is used to obtain the optimal lending rate and expected profits, and the results provide support for the proposed model. The result of this study provides valuable insights on designing effective incentives to encourage commercial banks to provide funds to SMEs and to encourage SMEs to pay back the loans to commercial banks, and thus is able to help resolve the funding dilemma between commercial banks and small and medium enterprises in China.

Suggested Citation

  • Qin Shang & Zhenzhong Ma & Xueyang Wang, 2020. "In Search of the Best Interest Rate for Group Lending: Toward a Win–Win Solution for SMEs and Commercial Banks in China," Chinese Economy, Taylor & Francis Journals, vol. 53(3), pages 285-299, May.
    • Handle: RePEc:mes:chinec:v:53:y:2020:i:3:p:285-299
    DOI: 10.1080/10971475.2020.1722359
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10971475.2020.1722359
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10971475.2020.1722359?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baomin Chen & Xinyun Yang & Zhenzhong Ma, 2022. "Fintech and Financial Risks of Systemically Important Commercial Banks in China: An Inverted U-Shaped Relationship," Sustainability, MDPI, vol. 14(10), pages 1-20, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:chinec:v:53:y:2020:i:3:p:285-299. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MCES20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.