E-commerce, Bank Loans and Financing of SMEs——A Theoretical Model Based on Information Economics
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| Title | E-commerce, Bank Loans and Financing of SMEs——A Theoretical Model Based on Information Economics
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| Author | Zhao Yue and Tan Zhibo |
| Organization | National School of Development, Peking University |
| Email | bettyyue@pku.edu.cn；tzb0905@pku.edu.cn |
| Key Words | E-commerce; Credit Rationing; SME Financing; Asymmetric Information; Default Cost |
| Abstract | Based on the theory of information economics, this paper sets up a mathematical model to analyze a new credit pattern emerging in China, in which SMEs obtain bank loans through E-commerce. In traditional credit contracts, credit rationing of SMEs occurs due to asymmetric information, since the contract consisting of collateral and loan rate can not fully screen different types of SMEs. The introduction of E-commerce solves this problem under certain conditions, since it can increase firms' default cost, alleviate information asymmetry and enhance risk sharing. It is proved in this paper that low risk SMEs that are subject to credit rationing in tradition credit contracts are able to get bank loans when E-commerce is present. Comparative statics concerning the features of E-commerce are conducted and policy implications are put forward based on the model. This paper lays the microeconomic foundation for the effects of E-commerce on the improvement of SMEs financing in China. |
| Serial Number | WP248 |
| Time | 2012-06-12 |
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