Abstract
As an important driving force for China’s economic transformation and upgrading, the problems of financing difficulties and expensive financing for SMEs have become increasingly prominent. The main objective of this paper was to analyze the impact of financial intermediary departments’ risk preference on corporate finance. Under the revised DSGE framework, this paper discusses the impact and stability analysis of commercial banks’ risk preferences on SMEs’ financing. The results show that positive interest rate shocks inhibit commercial banks’ credit to SMEs, and with the increasing weight of commercial banks’ risk preference for default rate, the trend of credit repression will be intensified.
Highlights
Erefore, in the context of mortgage loans as the main loan business of commercial banks, the financing difficulty of SMEs is largely due to the lack of qualified collateral
Ioannidou et al [8], Bonfim and Soares [9] studied from the perspective of bank risk-taking and found that when interest rates were low, Banks would lend more to risky companies in pursuit of more returns. is shows that under certain conditions, the change of risk preference of commercial Banks can have an impact on the credit level of SMEs
The main reasons of financing difficulty and high cost for SMEs could be summarized as follows: (1) e lack of loan collateral provided by SMEs is easy to cause financing difficulties; (2) SMEs have a high risk of default after they successfully obtain loans, which forces commercial banks to raise the loan interest rate to make up for the losses caused by default
Summary
The mainstream monetary policy model adopted by western developed countries is the new Keynesian DSGE model. E capital-labor ratio of all intermediate goods, enterprises of SMEs obtained from the first-order conditions is kxt−w1 nxt w a 1−. By minimizing the cost, the capital-labor ratio of all intermediate goods enterprises for large enterprises can be obtained as kdt z ndt z a −. Where πjt and mcjt denote the deviation of inflation and real marginal cost of SMEs from their steady states, respectively; pjt represents the relative price of SME product prices relative to final consumer goods. Ere are three external shocks in the model economy: monetary policy shocks and production technology shocks for large enterprises and SMEs. ey satisfy the standard first-order autoregressive equations. Where ρi reflects the degree of impact inertia and ei,t reflects external shocks, satisfying N(0, σ2i ) and i ∈ (u, axw, adz)
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