China private banking interest rates - from information economics point of view of re-understanding
Are non-financial space, and the financial risks associated with the increase in interest rates there is a rising trend,http://www.abercrombiefitchoutletuk.com, even when credit risk is extremely high, it is inevitable. Figure 4, when interest rates close to or more than i '(2),http://www.abercrombiefitchoutletuk.com, although loan supply has far exceeded demand, but because of adverse selection caused by low-risk borrowers out of credit markets, the remaining borrowers as high risk,http://www.abercrombiefitchoutletuk.com, Thus in this case, the credit transactions are no longer satisfied the principle of supply and demand in competitive markets,http://www.abercrombiefitchoutletuk.com, interest rates rise, not fall. This increase largely reflects the risk premium or discount. (4) So the question now is, like the transition economies such as China gradually lifted if the Because the elimination of interest rate ceilings, but the scope of this part of the credit activities of banks to re-supply from private financial institutions (all, sometimes only partially) returned to the bank. That is, when interest rates rise to restore a certain range of general interest and non-bank interest rate will be close to or even convergence (mainly point A on the left); for c-point behind the phenomenon is still there. Because,http://www.abercrombiefitchoutletuk.com, even if there were loans to banks to supply an alternative, high-risk borrowers (ie,http://www.abercrombiefitchoutletuk.com, adverse selection problems) and will not change this behavior change; credit squeeze may change those on the civil aspects of the loan pricing arbitrary, but the risk premium is still not eliminated, while banks also tend to require very high interest rates. For the A-B between formal financial institutions is still a bank lending rates. In short, regardless of the existence of Bank loan supply gradually But this does not mean that private finance will completely disappear, they still have their own space, and continue to * This thank the Central University of Finance Xiang Qian comrades, your comments and help us benefit. Note: ① See Supreme People's Court <borrowing on the People's Court case number of observations) in 1991, Article IV. ② Chiang Hsu North Korea believes that this lack of return on the interest rate of pure finance significance. See (ae country private financial studies), Shandong People's Publishing House, 1996. 8O first page.