Journal of Chemical and Pharmaceutical Research (ISSN : 0975-7384)

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Original Articles: 2014 Vol: 6 Issue: 5

Design of dynamic counter-guarantee reserves of loans to SMEs

Abstract

The small and medium-sized enterprises (SMEs) often need guarantee companies to guarantee the loan from banks, and the guarantee companies undertaking the businesses require SMEs to provide counter-guarantee. How should counter-guarantee risk reserve be paid? And how much should enterprises pay? There is a lack of relevant research at home and abroad. This paper builds dynamic counter-guarantee model in a guarantee system of the bank - guarantee company - SME cooperation with government support. According to the size of enterprises’ business risk , the counter-guarantee risk reserve is dynamically adjusted. When business risk increases, enterprises are required to increase risk reserve in the account; when business risk reduced, enterprises can extract excess reserve. Dynamic counter-guarantee reserve can be used to control bank loan credit risk, solid guarantee system, and help to solve the financing problem of SMEs.