Credit Rationing and the Simulation of Multi-bank Credit Market Model: A Computational Economics Approach

Yu Zhang, Xiong Xiong, Wei Zhang and Xuefeng Liu ()
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Yu Zhang: Tianjin University
Xiong Xiong: Tianjin University
Wei Zhang: Tianjin University
Xuefeng Liu: Nankai University

Computational Economics, 2018, vol. 52, issue 4, No 11, 1233-1256

Abstract: Abstract Using a platform provided by computational economics, we set up a simulation model on agents in artificial credit markets. We simulate credit transactions using debt contracts between firms and banks on different types of projects in different supervisory environments. Based on the results, we describe the overall features and rules of the multi-bank market. We find that the total amount of loans granted by banks to relationship firms is always more than that granted to non-relationship firms. Furthermore, the relationship between enterprises and banks can ease the financing difficulty of small- and medium-sized firms. From the social perspective, better relationships between banks and enterprises can promote economic growth. However, from the bank perspective, relationship lending does not improve profits.

Keywords: Small and medium-sized firms; Relationship credit; Computational economics; Artificial credit market (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s10614-017-9726-0

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