What is credit rationing
credit rationing meaning can be defined from a macro and micro perspective. Credit rationing in terms of the macro, it refers to conditions to determine the interest rate on the credit markets, the demand for loans greater than the supply. Microscopic point of view, it includes two aspects: ① All loan applicants, the part of the loan application is accepted, while the other part of the people even willing to pay high interest rates are not given loans; (2) lender The loan application only partially been met (for example, one million of the loan application can only loan to five hundred thousand). The
credit rationing causes
credit rationing phenomenon on the credit market information asymmetry. Asymmetric information led to the widespread phenomenon of moral hazard and adverse selection by the financial markets. The credit markets, adverse selection refers to the information asymmetry in credit before borrowing enterprise understanding of themselves and their projects than the bank. Borrower is clearly aware of their assets and liabilities, profitability and risk of default size, banks are only by virtue of the enterprises with reports, material, etc., to identify the type and average risk of the enterprise and loan projects, rather than borrower understand its market environment, financial condition and repayment will. Of asymmetric information on the credit markets, the Bank uses a uniform level of interest rates loans. When banks raise interest rates interest rates at a high level, resulting in the most willing to sign a loan contract is the minimum repayment possibility borrowers, borrowers lower project risk is lower because of its project earnings, are reluctant to bear a higher interest costs out of the credit markets, adverse selection. At this time, the average default risk of the borrower in the credit markets to rise, the bank's expected return is worse. The credit markets, moral hazard refers to the information asymmetry in credit after the borrower has the funds control and use rights, while the lender has a right to part of the proceeds of the funds, objectively speaking, there are opportunities for damage to the lender of the borrower 'behavior, ie, the borrower borrower after the change may be the direction of investment in high-risk high-yield projects. If the success of its high-risk projects World pipe network reported that the world's steel pipe network to provide the world's steel pipe network editor , its income in a given bank loan interest rates lower phase does not change greatly improve its investment projects, and even can be infinite, and if the high-risk project failure, limited liability, the borrower the cost is limited. Both phenomena will encourage banks to prefer rationing credit, they were reluctant to raise interest rates to meet all loan requests.
Assume that the bank's actions are consistent with the assumption of rational economic man, that is World pipe network reported that the world's steel pipe network to provide the world's steel pipe network editor , banks to maximize profits. According to Stiglitz and Weiss's analysis, the interest rate decision of the bank's loan proceeds, there are two effects, namely, the "adverse selection effect" and "moral hazard effect". Negative effects of these two effects on bank earnings. When the relatively low level of interest rates, adverse selection effect and the moral hazard effect is smaller, higher interest rates benefits higher than the negative returns of these two effects, the bank's total income level; improve the level of interest rates to a a critical point, raising interest rates lead to adverse selection effect and moral risk effect of negative returns in excess of the benefits of higher interest rates, the bank's total income but reduced. Lending rate and banks expected return relationship as shown below. Thus, the bank there is an optimal level of interest rates, more than the level of interest rates of loans, banks would prefer the implementation of credit rationing is also reluctant to raise interest rates.
Credit rationing exists on the macroeconomy and its main the impact
(1) credit rationing mechanism to enlarge the economy to external shocks, and a serious impact on the macroeconomy.
In the existence of credit rationing mechanism in the economy, the interest rate mechanism is limited, the financial variables on the macroeconomic impact of credit rationing mechanism on investment. New Keynesian view that the interaction of the exogenous impact of the economic and credit rationing mechanism to smaller exogenous shocks to enlarge, and thus have a greater impact on the macroeconomy. It is assumed that the economic impact due to the oil crisis and severe recession, a large number of corporate bankruptcies, reduced business investment, increased economic risk. Assume that banks in loans to borrowers classified as high-risk borrowers, medium-risk borrowers and low-risk borrowers. Due to the existence of the credit markets, credit rationing, banks to meet the low-risk borrowers, and some middle-risk borrowers. But banks there may be divided into error, high-risk loans classified as low-risk loans to low-risk loans classified as high risk borrowers, coupled with the economy in recession, so the banks to reduce the lender's expected return. To control risk, the bank can raise interest rates and tightening credit supply. Raise interest rates, there is a serious adverse selection and moral hazard, and could further deteriorate the bank's income. Therefore, in order to reduce risk, banks will tighten credit supply. Such a medium-risk borrowers will also be excluded from credit markets. With the reduction of social investment, the economic recession is more serious, further increase the risk to the economy, credit rationing will also be more serious. After this vicious circle, a smaller external shocks will be so large that, cause serious impact on the macroeconomy. Similarly to analyze the mechanism of the economic expansion of credit rationing mechanism.
(2) credit rationing theory negates the hypothesis of self-regulation, interest rates and the automatic clearing, provides a theoretical basis for government intervention in the market.
Incomplete information caused credit rationing makes market failure argumentation theory. The interest rate mechanism is no longer with the coordination of supply and demand of funds. Allocation of funds in the credit markets can not guarantee that the best projects to be financed, and some of the low efficiency of the project but may be financed, and thus there is a mismatch of resources. Moreover, credit rationing is one important reason for the lack of social investment. Summary of the above reasons, in order to compensate for the defects of market failure, to overcome market volatility, maintaining market stability, improve the efficiency of resource allocation, the Government need to take an active monetary policy.
(3) the existence of credit rationing mechanism to urge the banks to seek loan pricing means other than interest rates.
The root causes of credit rationing is the asymmetry of information exists on the credit markets, leading to incomplete awareness of the risks of bank lending targets, the interest rate mechanism has been severely constrained, and can not reflect the level of risk of the lender, and then the unreasonable pricing of loans, an increase of the bank's risk. To reduce the extent of credit rationing, the need to radically reduce the information asymmetry, as completely as possible to understand the benefits and risks of the customer's credit and loans for projects to make more accurate pricing. Specific ways: to strengthen ties with customers and establish long-term stable relationship with the customer, and signed a more complete contract, the provisions of the incentive in the contract, the terms of the regulation to increase the probability of repayment.
Resolve commercial banks credit rationing for SMEs the envisaged
in market economy conditions, banks and enterprises should be in accordance with the rules of market economy as a constraint on the basis of mutual benefit to establish a bank-enterprise credit system, the development of adaptation the bank and collaborative contractual relationship of the market economy conditions. This new type of bank-enterprise relations, the interests of the purpose of credit is the foundation, the rules of the market conditions, the law is to protect the government, enterprises, banks tripartite subject. Lending practices between banks and enterprises in line with the rules of the market transactions, subject to the constraints of the credit relationship, the bank about loans, repayment of approximately a virtuous cycle of credit funds. The interest rate of capital supply and demand price signals, banks and enterprises to both sides according to the situation and the degree of risk of projects or enterprises to adjust their behavior. Government policies, laws and regulations for banks and enterprises to provide an environment of fair cooperation. To resolve commercial bank credit rationing for SMEs should proceed from the following aspects make joint efforts.
1. Both Bank must speed up the reform of the modern enterprise system. As soon as possible to establish clear property rights and the modern corporate system, the responsibility to the people, power is clear, the interests of clear, mutual restraint, in order to adapt to the development of market economy. At present, the four state-owned commercial banks, or is scheduled to carry out shareholding reform, with clear property rights, to really set up to operate independently, self-financing, self-restraint, self-development of financial enterprises. For businesses, we must start from the structural reform, only the change of the operating mechanism can only be a temporary solution. Companies require banks to write off the debt, interest on unpaid debts, loan stocks, conversion and Bank of none other can only solve the problem of corporate existence as part of the surface. Institutional issues are not resolved, the occurrence of new debt crisis still exists.
2. Implementation of "Dos and Don'ts" to fundamentally change the pattern of corporate debt. Relevant government departments should play a "window" guiding role of the state-owned enterprises to develop some Dos and Don'ts "strategy, and adjust the layout of the development of the national economy and development strategy, focused on basic industries and the national economy and industry, to exit the General and competitiveness of the industry or project. Restructuring of the company's existing debt to take practical measures can take the auction, merger, sale and bankruptcy can also be a shareholding system reform, new channels.
3. Steady progress in the interest rate market, the commercial banks according to the different risk profile of the difference to determine the level of interest rates. , But also allow enterprises to the banking options to reduce financial costs. This is the market interest rate of a highly interactive system and operational mechanism. In the interest rate elasticity of the difference between the price of commercial banks can be implemented towards the enterprises of different quality, neither good quality out of credit markets arising from interest rate factors, but also in the case of controllable risk financing for SMEs and commercial banks to obtain a better income compensation.
4. The Government should strengthen regulation of the local economic development. The Relationship between Bank, the Government should first help enterprises establish and improve the modern enterprise system, especially for state-owned enterprises, the Government has a responsibility supplementary capital in place, improve the level of own funds of enterprises. At the same time, the enterprise property rights system reform, the implementation of the separation of management rights and management rights. Second, small and medium-sized state-owned enterprises to carry out strategic reorganization of the flow and optimize the portfolio of state-owned assets under the premise of proper compression front, prompting the state-owned assets from dispersed small and medium enterprises to large corporations, disadvantage enterprises from inefficient to efficient the advantage of businesses, from general competitive areas to focus on strategic areas, and foster new economic growth point. Again, the government should actively promote the establishment and improvement of the focus on small and medium enterprises loan guarantee mechanism, jointly funded by the financial and corporate and absorbed social hot money to set up a guarantee fund or project sinking fund to solve the problems of business loan guarantees. In addition, to speed up the establishment and development of risk investment mechanism, and actively help enterprises to issue corporate finance bonds, use of social capital to force a partial solution to the part of the financing of small and medium-sized enterprises, to the community, funds to the market to be effective. Lastly, the Government must take seriously the problem of corporate evasion of bank debts and to ensure that the bank claims the level of policy, organization and legal protection.
5. Actively cultivate corporate credit quality, and strive to explore the various channels of direct financing, to reduce excessive dependence on bank loans. Enterprises to cultivate their own credit qualification at the same time, we should also actively explore the channels of direct financing, to reduce excessive dependence on bank loans. In addition to the listing of enterprises, between enterprises adjust funding channels should open up. Internationally renowned companies, finance companies set up within the large group in addition to the swap internal function of the idle funds, financial intermediation between enterprises to facilitate the financial support of its upstream and downstream enterprises to ensure that the situation in the industry as a whole at In the benign state. At the same time, government departments and the People's Bank to take measures to regulate the private lending, opening the channels of the use of private funds. For the more developed regions of the eastern part of our economy has a greater balance in terms of private financing, commercial banks are very interested to intervene in such a big market for these enterprises to act as financial advisor to provide transfers of funds between enterprises and businesses to use private funds service programs, the relationship between commercial banks and enterprises to break through the functions and roles of the people of the money supply alone.
6. Commercial banks to strengthen the asset risk management, risk prevention mechanism to establish and strengthen the professional services companies. The correct guidance of the government, banks as major creditors of state-owned enterprises, state-owned enterprises to optimize the capital structure to carry out the reform of the reorganization of assets, should make a difference. Banks can adopt a different strategy based on corporate balance sheets and economic benefits of good or bad, such as through the selective input of the re-arrangement of existing claims and new loans, prompting the state-owned enterprises to carry out structural adjustments. Banks according to the needs of enterprises can also provide financial services to corporate cash management and capital operation, financial costs and financial risk to a minimum bit. Better for those fundamentals, the prospects for business development, but temporary difficulties the company should provide professional help and propose solutions. As long as the minimum loan conditions, can also obtain bank credit support. At the same time, banks should also increase the capacity of business development and corporate risk assessment and forecast level, balanced and put in new loans. Bank of new loans is too concentrated, easy to form a bank credit risk accumulation. The short term, the concentration of credit to some extent, avoid the credit risk, but also conducive to the further development of large enterprises, the advantages of the industry and economically developed regions. However, the overall situation and long-term view, may be a greater negative impact. The one hand, large enterprises too much money, once the abuse may lead to increased risk of enterprises and banks; the other hand, many growing SMEs cash-strapped, Arrested Development. The uneven distribution of funds has also led to uneven economic development of the industry, industry and region. So, new lending, and invest constantly tended to focus on the main input to the current credit environment, poor, related to bank loans little freedom of choice, and also reflects the business philosophy of the banking sector update slow, target market segmentation is not enough. Therefore, commercial banks must have an accurate grasp of the country's industrial policy, look at the development business, find business advantages, and dare to face the risks, good understanding of risk, with expertise in the analysis of risk, is committed to defuse the risks, and ultimately benefit from risk.
7. Give full play to the People's Bank's policy guidelines and role as a link. First of all, the People's Bank and the government in charge of the industry sector should enhance communication and joint regularly issued to commercial banks, capital requirements for SMEs information and industry developments for commercial bank reference, and to reduce the search costs of commercial banks. Secondly, with the Government to help commercial banks to establish a good financial ecological environment, accelerate the construction of credit system to promote the commercial banks according to the law to the joint constraints, motivating debtors to achieve a virtuous use of credit funds, and ultimately improve society as a whole economic and social benefits. Finally, the People's Bank of viable enterprises differential of interest rate management, support different credit ratings for commercial banks, enterprises of different scientific and technological content of bank bills rediscount and take a different interest rate on loans and directly improve the commercial banks to the difficult loans for SMEs credit facilities, but also indirectly encourage enterprises to keeping promises and accelerate the pace of modernization.