An Effect Analysis on Government Financial Subsidies of SME Credit Guarantee

Abstract

Under the condition of incomplete information, the guarantee institution charges the premium and the counter-guarantee product will change the enterprise's income function, thus reduces the enterprise’s income and makes some enterprises that unable to provide the counter-guarantee exit from the credit market, leading to the credit guarantee paradox. The government financial subsidy can effectively alleviate the credit guarantee risk of SME, and realize the win-win of bank and guarantee institutions through the amplification effect of guarantee loan scale.