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Some Thoughts of the credit guarantee system of the regulatory system missing

Author: ChenFeiXiang From: www.yourpaper.net Posted: 2007-11-20 07:05:15 Read:
Abstract: SMEs are an important new force to the development of the national economy, financing has become SMEs lingering pain in my heart. Provides a new way of thinking through credit guarantees for SME financing, design a low-cost but effective regulatory system, there are many institutional barriers between the SME credit guarantee companies and banks, however, the system designer to reduce or avoid regulatory Lack of System supervision work should be the top priority.

Keywords: SME Bank credit guarantee regulatory system Lack of System

I. INTRODUCTION
SMEs play an increasingly important role in the process of the development of the national economy, however, faces a huge funding pressures, on the one hand limits the space for the development of SMEs conditions, another aspect of SME credit system is still not perfect. For the financing environment for SMEs, the problem of financing, it was suggested that the formation of private banks, that incremental reform, specifically for small and medium-sized enterprises (Lin 2000; Jiang its Service, 2001); been proposed that the state-owned bank privatization, namely stock reform, the establishment of SME service system, to increase the financial support for SMEs (Pei-2000); also been advocated by the corporate bond market (WORLD ECONOMICS, 2000), the stock market, especially the second board market (Competitive Selection, 2001 ; Chen Xiaohong, 2001) to raise funds for small and medium-sized enterprises (economists website, HUANG Fei-ming "lack of credit based on the analysis of the problem of financing SMEs"). In order to solve the problem of financing SMEs, in accordance with international practice is to vigorously develop the credit guarantee company, connection and integration between SMEs and banks financing through the intermediary function of the credit guarantee companies, enhanced funding for SMEs supply chain, promotion of small and medium-sized the development of enterprises. At the same time, credit guarantee company in full swing in this historical context to grow and develop, but we have to see the series of the Credit Guarantee Corporation, (Jinglian, 2004) such as credit management confusion, lack of supervision, etc. . Some media said the credit guarantee industry is "too late to prosperity on the crisis in the industry, the people expressed concern about the future of the security industry. As the financial industry is a market highly incomplete, economic activities, a high degree of information asymmetry is precisely because of this characteristic, the reason for opportunistic very flood, then prevent opportunism protected the legitimate rights and interests of the parties is the regulatory system should be of justice. If the legitimate rights and interests of the parties is not necessary protection to allow rampant opportunism order anomie is expected thing. Policy makers need to reshape the financial industry, the credit system and the re are two aspects to make up for the lack of institutional regulatory system in order to establish an open, competitive and orderly, harmony, equality of opportunity, financial market structure. View from the existing pattern of development of the credit guarantee system, the government is well separated from the nature of the policy guarantees and commercial guarantees, in the formulation of policy and oversight measures and policy guarantees and guarantees of commercial legislation fuzzy between the boundaries, resulting in some of the policy and legal vacuum space increases lead to confusion and speculation. Can say that China guarantee industry crisis of survival, the core issue is the basic distinction not clear guarantee policy of the Government to promote and market the objective needs of the commercial guarantee the integrity of the company ("digital Fortune magazine 2004 9 reported Chen Hongjuan put it). Such fuzzy rule, commercial credit guarantee institutions to regulate the legal basically does not exist, no special regulatory body to supervise them, and the resulting the industry serious absence of supervision, guarantee agencies disorderly competition between the status. This will not only increase the risk of credit funds of the banks and other creditors, but also pose a serious threat to the future development of the security industry, must be taken to strengthen the government's supervision, strengthen self-discipline and other measures to be overcome (Jinglian, 2004). Guarantee industry in the face of these serious problems, the government, the security industry, banks, small and medium-sized enterprises need to reflect, in particular, under the premise of the problems caused by the lack of supervision, we need to begin to dissect from the system guarantees the survival of the industry crisis. This paper attempts to analyze the problem of lack of supervision of the credit guarantee industry from the perspective of the new institutional economics, game theory, behavioral economics final studies have shown that the regulatory system is missing is a vital defects in the regulatory system, to make up for a lack of institutional supervision should become the most important task of the regulators.

Second, the lack of institutional credit guarantee regulatory system analysis
Since the nature of the businesses of the classic 1937 Ronald Coase published literature <<>> article, the followers of the new institutional school of economics research ideas along the Coase stop we go deeper, setting off a shares research frenzy of the New Institutional Economics. Compared with neoclassical economics, new institutional economics more attention to the impact of the system on human behavior and market structure, when neoclassical economics simply abandon the system as a variable to the study of human behavior has been far from the essence up description of some social phenomena and laws of the market. Coase argued that the emergence of the enterprise is established the need to reduce transaction costs, when both transaction costs of trading in the market is much larger than the composition of a collective (Note: The author believes that the formation of such a group can be referred to as enterprises) the cost, then the transaction from the market shift to enterprise, and vice versa. The size of the business is equal to the internal transaction costs and market transaction costs consistent point in time. Oliver Williamson from bounded rationality, the proprietary nature of the assets, opportunism three further analysis of the enterprise, business managers and business execution within the framework of a contract, he thinks there are short-term behavior maximize the possibility to pursue their own interests is consistent with the hypothesis of economic man, but if the two sides in the pattern of certain interests into reasonable compensation of interests and an effective incentive will allow them to abandon opportunism to long-term is expected to form a long-term joint force avoid segmentation of the enterprise, in order to ensure the long-term development of the enterprise. Steven Cheung from the perspective of government regulation and corporate spontaneous to examine the relationship between them, if the enterprise's property rights are unclear, the government needs to intervene in the reformulation of the boundary of the property rights allows property freely traded in the market or individual hands, optimization resource allocation, active trading venues, and create new wealth. However, in the case of clear property rights, property rights of enterprises if the government intervention will lead to rent dissipation to zero until the rent dissipation. Steven Cheung has consistently stressed that as little government regulation as possible, the natural law of the survival of the fittest, the enterprise will spontaneously to meet the best interests point of view, and Hayek's "spontaneous expansion of the order the same purpose. Freely traded in the hundreds of thousands of enterprises, only to continue to expand both competition and cooperation with others, order the enterprise to win in the process of evolution of this enterprise, and the government needs to be done is to ensure that enterprises between the transaction is fair, transparent, legitimate and fair. From these masters in economics perspective on the credit guarantee regulatory system, there will be a fresh feeling. Coase proposed transaction costs be inspired by the SMEs financing process is essentially a group of creditors debt deed transactions between SMEs and banks, the discovery of this contract, negotiation, execution, and to prevent the high cost, the group contract transactions can not agree action to diversify risk and reduce transaction costs in order to contribute to the successful docking of this group of lease transactions between SMEs and banks, then you need an intermediary institutions (Credit Guarantee Corporation). Credit guarantee companies in order to contribute to the successful docking of the birth of the debts between SMEs and banks contract transactions, but the creditors, the debtor, the third party is both creditors and debtor mixture of effective supervision is essential. From the above analysis, we gave a good idea of ??the policy makers in the introduction of credit secured regulatory system, from the source to avoid regulatory loopholes that need to guard against the institutional level three of enterprises, banks, credit guarantee companies between opportunistic behavior, strengthening mutual cooperation, win-win situation. However, from the view of the current state of development of the credit guarantee, the lack of institutional regulatory levels is a very thought-provoking questions. First, the government has the responsibility to reshape the social credit system, the integrity of this value-oriented of any industry, regulatory costs are very large in the community as a whole is missing, only to establish standards of integrity in a vast majority of people's social system The order, transaction and management costs can be greatly reduced. When the punishment is far greater than the cost of personal fraud was discovered when he or she deceive the proceeds, and even lead to the edge of ruin or bankruptcy, it will force him or her to give it to defraud steering trustworthy or cooperation, thus purifying the integrity of the environment of the community as a whole, is conducive to the sound development of the society and the individual. The current phenomenon of our Kengmengguaipian is very prominent, the key reason is the lack of the integrity of the system, fraud to obtain benefits greater than the cost of the punishment, people are willing to cheat. Incentives such deception often with the government and policy-making relationship, the commitment of the Government of the People's often not credible, especially in the local government's commitment to untrusted phenomenon is particularly serious, because the government promises to the people, in many cases so that the original concept of integrity held by the stimulation of the government's commitment can not be trusted, should have been safeguarding the legitimate rights and interests in the plunder of government exploitation will gradually abandon adhere to the principles of integrity into not trustworthy, since such adverse oriented so that the original concept of good faith to give up integrity, never trustworthy like a duck in the pursuit of their own ill-gotten gains. If the government itself fulfills his own commitment to people or other groups, lead by example, never acts, then create a trustworthy ethos of the society as a whole has a very good demonstration effect, then, is an important base for building a harmonious society slowly build up. Game theory to us reveals a very important principle stakeholders in the course of the game only once the game is possible, although the parties choose the benefits of cooperation than the parties to utilize the benefits of fraud, but the both strategic interaction tends to on fraud instead cooperation, however, in the process of repeated game, the game tend to cooperation is to give up the fraud the cooperation proceeds greater than the proceeds of the fraud, but in the last game of the tendency of fraud still occupied on the front. To stakeholders once the opportunity of the game, to put an end to the sexual behavior of the transaction the parties to prevent fraud, but set the stakeholders in the cooperation within the framework of a repeated game inspired policy makers in formulating policies to prevent to achieve a win-win situation, the supervision and regulatory costs of the party in greatly reducing the tendency of stakeholder cooperation. Now we go back and look at small and medium enterprises, banks, credit guarantee companies among the interests of the SMEs and the banks exchange game close to the one-off behavior, and SME credit guarantee companies may be a community of interests Why? Since most of our banks are state-owned, the property rights owned, its biggest shortcoming is that property rights lead to asset easily lost four state-owned commercial banks for bad and doubtful debts high it is an indisputable fact, so many companies in order to squeeze the state-owned assets Piandai reluctant to lend the banks in order to reduce the bad and doubtful debts rate is a main reason for the vast majority of small and medium enterprises with poor credit, good credit and SME can find private bank borrowings, private banks refused to borrowing SMEs only bad credit, the state-owned banks in the case of facing a great risk naturally reluctant to lend to these small and medium enterprises, SMEs spoils conspired together to defraud the bank loans in order to get the loan may find a credit guarantee company. The CGCs Why willing to work together and SMEs conspiracy to defraud? Key reason for the policy guarantees companies and commercial security boundaries without distinction, may be guaranteed by the government-funded company in the course of subsequent government did not inject new funds to supplement funding the continuation of the chain and increase the risk compensation, lead aggravated guarantee commercial behavior, direct and commercial security companies to participate in competition, lead to vicious competition, resulting in financial order anomie; some policy guarantee company is part of a number of administrative departments, causing confusion in management, lack of supervision, lost policy obligations to become the guarantee company policy and commercial cross-guarantee companies, the company responsible person has the incentive to maximize the pursuit of personal interests; funds small scale of some of the commercial guarantee companies, poor ability to resist risks assumed too risky, intends to raise the premiums, or unsustainable credit guarantee market, the premium is too high, hindered the smooth flow of financing channels for SMEs, to find a new way to do everything possible in order to survive; banks passed on a lot of risk behavior to give credit guarantee company insiders credit guarantees uneasy. In this environment, the security company can easily abandoned the original purpose of steering short-term behavior, the pursuit of opportunism to achieve their own interests. Policy-makers need to consider the arrangement of the dual system of incentives and constraints, constraints no incentive did not work alone, and that incentives no constraint does not work, and our existing credit guarantee system, there is a lack of incentive and restraint both. As the biggest advantage of the SME is able to solve a lot of employment, government, banks and guarantee agencies can provide a good platform for the financing of small and medium enterprises, the development of small and medium enterprises would not be facing financial bottlenecks, then they otherwise would have government commitment employment heavy responsibility borne by SMEs, is actually busy SMEs to help the government, the key problem is the Government has to provide financing services for small and medium-sized enterprises, but also to monitor the whereabouts of the funds, the creditworthy and its joint and several liability ( Credit Guarantee Corporation) to give a reward stimulus to their trustworthy behavior redouble their efforts, a higher level, SME credit guarantee companies on this basis through a credit upgrade to the highest level, the government should be established for them a certain amount of the credit line , SME credit guarantee companies can work together to issue corporate bonds, direct financing, credit guarantees from the profits of SMEs in accordance with a certain proportion into, so that put the interests of the SME credit guarantee companies tied to the cost of government regulation greatly reduced, while stimulating the enthusiasm they join forces to seek maximum benefits; given severe punishment for bad credit small and medium-sized enterprises and Credit Guarantee Corporation can even liquidate its property or the auction of its assets by the government as a warning to latecomer . Commercial guarantee companies not only bear the responsibility of the Government should provide employment for legitimate labor them and the lack of incentives, but also to undertake the banks pass on huge risks, they want to survive in the market disorderly competition guarantees shall not avoid regulation that illegal activities to be maintained, potentially increases regulatory costs of the regulatory bodies. The above almost sterile someone comes to the supervision of the commercial guarantee companies, in essence, is the problem of the lack of supervision of credit guarantee policy makers design system. Second, the Credit Guarantee policy makers regulatory design online should be extended to the bank, the proportion of risk between the companies and banks in the credit guarantee arrangements, both income amount should decide not to risk all or almost wrestling Service on a party. Risk aversion is the basic characteristics of each person, up to the degree of bias risk neutral, risk preference, however, is a compelling case to appear desperate gamblers mentality and policy makers in the design of the regulatory system is not to intentionally or unintentionally will perform ±ΖΟς gambler mentality. Consideration of policy makers seems defective in exposures between credit guarantee companies and banks, especially commercial guarantee companies bear the huge commercial risk, the commercial guarantee companies seeking new ways (these methods are generally , illegal) to risk-averse to go gamble mentality is inevitable, is also expected. Policy-makers need to pass between the benefits and risks of the credit guarantee companies and banks bundled together, at the same time again the benefits and risks of small and medium-sized enterprises and Credit Guarantee Corporation bundled with institutional arrangements to effectively monitor among interactive behavior. Both banks and the vested interests of SMEs Credit Guarantee Corporation guarantees can not but they are both responsible for, any to perfunctory party will bring huge revenue losses and credit loss, both delicate and cooperation through this relationship contain each other the other party, then the regulatory cost will be greatly reduced. Content to see the existing credit guarantee companies, institutional defects in the regulatory system for banks and SMEs is significant. From the country's large number of cases of financial fraud replay of view, many examples of credit guarantee companies and small and medium-sized enterprises Joint fraudulent bank which systemic defects in the regulatory system is a very important reason. The policy guarantees, though not for profit for SME security behavior in securing bank loans to related companies, the problems it faces the same grim. Just because the policy guarantee company contributors government principal - agent relationship exists. The Government has commissioned its agent to manage a relatively large number of funds, the supervision of the principal agents difference between open and supervision of the commercial guarantee companies. Based on this understanding, policy makers need to grasp the the directivity context of a good regulatory system, and guarantee the survival of the industry in China crisis is not a good distinction between the guarantee policy of the Government to promote and market the distinction of the objective needs of the commercial guarantee to As for the survival of the Credit Guarantee Corporation guarantees market in cohabitation crisis is Yibubuxiang approaching them. The principal pursuit of the goal of maximizing the interests of the company and agent to pursue the goal of maximizing individual interests is contrary to, and at the same time is highly asymmetric information between the principal and agent, in this case, to prevent adverse selection and moral The Risk also need a good institutional arrangements. Policy guarantees the company not only the need for internal oversight, and the need to correctly handle the relationship between credit guarantee companies, banks and SMEs three commercial guarantee company does not exist such a situation, individual investors, private property rights guaranteed behavior only The purpose is the pursuit of the company's revenue maximization and regulators to ensure the legitimate rights and interests of others is not guaranteed company bully victims under fair trading environment. It is also very important, the government need only guarantee industry for macroeconomic regulation and control, rather than intervene in a normal manner. Whether policy guarantee companies or commercial guarantee companies, they have their own operation trajectory, the largest government functions is to provide them with public goods or quasi-public goods, and to safeguard their legitimate rights and interests, and not obstacles to split the benefits, it should be do their patron saint. In fact, the government may be in the establishment of a monitoring and regulations, on the one hand, want to constrain the rights of the parties, on the other hand in the scramble for profits with them. In view of this, the Government and supervision, effective self-restraint should be on their own power to change the attitude of interference on the regulated side too, the devolution of power from the system level to develop a regulatory compliance system. In a way, regulators and regulated parties tense confrontation regulators over-constrained regulators, and the corresponding lack of incentives, and the powers of the regulators was hugely magnified not been effective constraint-based, and thus cause a conflict. From the perspective of the design of the regulatory system of credit guarantees, the regulators and the regulatory side of the bundle of rights and obligations of the beam can not release the rights of the regulators may be too large, the obligation may be too small regulatory party rights may be too small, the obligation may be too large, the unequal situation will inevitably lead to the defects of the regulatory system. From the above analysis, we believe that support SME development in the design of the regulatory system, the balance of small and medium-sized enterprises, banks, guarantee companies three need to start from the institutional to avoid regulatory system missing.
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