Traditional Bank Lending,Fintech,and SME Financing
The difficulty with financing and high cost of financing of small and median enterprises(SME),which have their significant characteristics of cash flow uncertainty and information asymmetry,is a serious challenge.However,the information asymmetry between the lending party and borrowing party always persists.Whatever the firm gets the funding through different lending methods,it essentially still falls under the debt financing way based on the principal-agent relationship.Prior studies show that new technologies such as big data and financial technology can help mitigate adverse selection and moral hazard issues resulting from information asymmetry to some extent.However,even with access to funding,the economic uncertainty could exacerbate the cash flow uncertainty of SME,leading to bankruptcy.Consequently,the refinancing behavior of SME may also be hindered.Therefore,exploring innovative lending methods and loan products through the development of finan-cial technology to address issues such as insufficient collateral assets,high default risk,and severe information asymmetry faced by SME in financing,to meet their financing needs,remains a significant topic of continuous concern for scholars both domestically and internationally.This paper establishes a dynamic financial model based on the continuous-time contract theory,quantitatively studies the optimal loan contract that can mitigate the dynamic moral hazard faced by entrepreneurs and discusses the impact of the two lending methods on debt financing for SME and the difference between them.Specifically,the dynamic moral hazard refers to the situation where,after each period's loan contract is signed and executed,due to the unverifiable and unobservable of the information about whether the entrepreneur exerts his effort,the entrepreneur may shirk to seek private gains.Moral hazard reduces the success probability of the invested project,leading to loan defaults.In case of default,the entrepreneur loses expected returns,and default loss is borne by the creditors.Consequently,if entrepreneurs wish to obtain loans in the long term,they will trade of the expected returns from the investment project by exerting efforts and the private benefit obtained from shirking in each period's loan contract.Therefore,the optimal loan contract is the equilibrium result of the dynamic game between the borrowing party and lending party.Based on this,the paper discusses the impacts of various factors on the optimal loan rate and the firm value,and compares and analyzes the differences in the optimal loan rates under the two lending methods,as well as the fundamental differences in the impact of the two lending methods on SME financing.The results derived by our proposed model reveal that the optimal loan contacts do exist and they are the trade-offs between the lender's private benefit and the entrepreneur's expected profit of getting consecutive loans,regardless of one financing way or the other.The optimal loan contract can enhance the firm value com-pared with the market loan contract,and the higher the volatility of firm cash flow,the higher the optimal loan rate and the lower the firm value.There is no substantial difference between the optimal loan interest rates of the two financing ways.Fintech would not reduce the default risk premium of firm loans,but it can reduce the marginal cost of financing.Moreover,Fintech can use the endogenous asset,i.e.,the credit cost of default,as a mortgage-like asset to effectively lower the threshold of obtaining loans for SME and to improve financial inclusion.In addition,the entrepreneurs should be exposed to appropriate market risk to motivate them to exert efforts so that both of the expected profits of SME and the lenders would be increased.Based on the theoretical results,this paper provides a systematic analysis and comparison of the optimal loan contracts under the two lending methods,helping us understand the potential advantages of internet finance com-pared to traditional bank lending in SME financing.This study offers a theoretical framework to explain the finan-cing dilemma faced by SME,and provides the scientific basis and the policy inspiration for promoting the stand-ardized development of financing business models based on financial technology and big data.
国家科技期刊平台
NSTL
万方数据
维普
