Research on Innovative Strategies to Regulate Private Lending for Small & Medium Enterprises in China——Based on Analysis of Modeling of Adverse Selection & Game Theory
Jiajia- Chen, Shuge-Tian

Abstract
By studying current situation of private lending for SMEs(Small and medium enterprises) in China ,the paper takes advantage of Modeling of Adverse to analyze that assessment of private financial institutes for average profits with investments of SMEs impacts interest rates of loan, which might cause high interest rates of private lending; through Game Theory of Nash equilibrium, supervising organizations enforce efficient regulations, then the SMEs legally run businesses and private financial institutes would legally lend money to SMEs , therefore illegal lending might be eliminated. Based on above, from the perspectives of private financial institutes 、SMEs and Supervising organizations , the paper puts forward to a number of innovative strategies to regulate private lending for SMEs in China.

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