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Credit risk control for small businesses based on the theory of incentives and restrictions

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Authors


Candidate of Technical Sciences, Associate Professor of the Department of Finance and Economic Analysis
Russia, Ufa State Aviation Technical University
yufir@yandex.ru


undergraduate
Russia, Ufa State Aviation Technical University

Abstract

This article analyzes the relevant theories of incentives and constraints based on the use of an instrument to mitigate credit risk, including collateral, guarantees, offsetting, and credit derivatives. Relevant incentive and constraint theories include principal-agent theory, mechanism design theory, and incentive theory. Incentive restrictions in small business loans are categorized into pre-loan pre-signal check and post-loan moral hazard suppression. The use of these mitigation tools can not only effectively reduce or transfer the credit risk incurred by banks, but also reduce the capital employed in calculating regulatory economic capital.

Keywords

commercial banks, small business, credit risk, incentives and constraints theory, principal-agent theory, mechanism design theory.

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Krioni Olga Valeryevna , Abdullina Yulia Firdausovna
Credit risk control for small businesses based on the theory of incentives and restrictions// Modern Management Technology. ISSN 2226-9339. – #3 (93). Art. # 9317. Date issued: . Available at: https://sovman.ru/en/article/9317/

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