Study on the Relationship of Folk Finance and Rural Small and Medium-Sized Enterprise
Hai-ling Guan1
COMPUTER MODELLING & NEW TECHNOLOGIES 2014 18(12C) 1038-1043
1 school of Economic and Management of Taiyuan University of Science and Technology,ShanXi Province Taiyuan city,030024
As the integral part of finance markets, the rural folk finance exists extensively and has been playing an important role in small and medium-sized enterprise financing. This paper points out the way to implement the Nash Equilibrium of both the lender and the borrower of rural finance. Based on borrowing behavior of rural finance by the game analysis, we find that establishing folk restriction mechanism, such as reputation mechanism, guarantee mechanism and third-party restriction and supervision mechanism is an optimal way to solve the problem existing in rural finance. With the aid of cob-Douglas production function, which shows that there is a huge financing gap existing in rural small and medium-sized enterprises. So,it’s important to seek more financial support from the rural financial market; the development of the folk finance speeds up the progress of rural small and medium-sized enterprises, and vice versa.