Abstract
In traditional loan agreements, because of adverse selection, banks will worry that bad SMEs will easily imitate as good SMEs to get extra income, so the interests of banks will be lost, as a result banks do not want to provide loans for SMEs. In this article, first, we analyze the effects of adverse selection for SMEs’ financial demand. Then we study the selective contract under the condition of industry lending. We can see that selective contract can avoid the damage caused by adverse selection and make tripartite win for banks, loan companies and guarantee enterprises. The conclusions we made in this paper have a good value for SMEs lending practices.
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Zhong, S., Luo, B., Zhao, Y. (2014). Research on the Design of the Selective Contract Under SMEs’ Financial Demand. In: Xu, J., Cruz-Machado, V., Lev, B., Nickel, S. (eds) Proceedings of the Eighth International Conference on Management Science and Engineering Management. Advances in Intelligent Systems and Computing, vol 280. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-55182-6_21
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DOI: https://doi.org/10.1007/978-3-642-55182-6_21
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