One of the most pressing issues facing developing economies is how to provide expansion capital for existing businesses. But in China, where private enterprises suffer significant financial constraints from capital market limitations, this issue is more pressing. Therefore, the significance of...

Listed companies in China have provided large numbers of loan guarantees for borrowers in recent years. The loan guarantee size of A-share Main Board listed companies was about RMB 3.85 trillion at the end of 2017. On the one hand, loan guarantees help borrowers access debt financing, which...

To address credit constraints in small-business lending markets, policymakers frequently use loan guarantees, which insure lenders against default. Guarantees affect loan prices by altering the effective marginal cost of lending but may create a moral hazard problem, weakening lenders’...

Loan guarantees represent a form of government intervention to support bank lending. However, their use raises concerns as to their effect on bank risk-taking incentives. In a model of financial fragility that incorporates bank capital and a bank incentive problem, we show that loan guarantees...

Loan guarantees represent a form of government intervention to support bank lending. However, their use raises concerns as to their effect on bank risk-taking incentives. In a model of financial fragility that incorporates bank capital and a bank incentive problem, we show that loan guarantees...