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Optimize Business Models and Improve Service Efficiency of the Financing Guarantee System (No.102, 2019)


By Zhang Chenghui, Research Institute of Finance, DRC

Research Report, No.102, 2019 (Total 5602) 2019-6-28

Abstract: Financing guarantee refers to an economic behavior in which a third party bears the liability if the borrower breaches the contract in order to ensure the realization of the creditor’s rights and reduce capital risks in economic and financial practices. Enterprises and state institutions that take financing guarantee as the main business and charge corresponding guarantee fees play the major function for financing guarantee. In a bid to support the development of SMEs and innovation projects, China began to build the financing guarantee system in the 1990s. Looking back, it could be found that the traditional financing guarantee system is inefficient due to the lack of sustainable development model. The paper puts forward the index for gauging the reform results of financing guarantee system. After comparing the different reforms of financing guarantee systems both at home and abroad, it notes that while China’s economy is shifting toward high-quality development with an urgent need to improve the efficiency of industrial development, it is necessary to enhance the overall sectoral service efficiency through restructuring and renovate the business model of financing guarantee with modern financial technologies. The paper also proposes some policy options for the government on how to bolster financing guarantee institutions.

Key words: financing guarantee, business model, reform