The mechanism of enterprise credit guarantee risk contagion considering ESG

Jingyi Zhang and Xuejuan Liu

Mathematics and Computers in Simulation (MATCOM), 2024, vol. 221, issue C, 503-514

Abstract: We establish an equation to reflect the relationship between ESG and the infection probability of enterprise system, and then we construct an interaction model between ESG and enterprise credit guarantee risk contagion. Additionally, based on the actual data, the simulation and the sensitivity analysis of important parameters are performed. The study found that ESG can effectively control the enterprise credit guarantee risk contagion. In addition, the following measures are of great significance to control the contagion, including refining the ESG rating, incorporating indicators related to enterprise credit into the ESG evaluation system, improving the supervision mechanism, enhancing the ability of enterprises to resist risk, giving appropriate external intervention guidance, completing the enterprise guarantee system and improving the market exit mechanism. Furthermore, the greater the impact of ESG on the infection probability of enterprise system, the greater the sensitivity of transmission rate and cure rate. Hence, the measures should be taken in time to reduce the transmission rate and raise the cure rate while improving the influence of ESG.

Keywords: ESG; Credit risk; Enterprise guarantee; SIRS model; Contagion mechanism (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matcom:v:221:y:2024:i:c:p:503-514

DOI: 10.1016/j.matcom.2024.03.013

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