Credit decision making for small and medium enterprises based on interplayed theory

Abstract

With the promotion of the degree of marketization of China's economic system, small and medium-sized enterprises（SMEs）have been booming, and their financing needs have increased rapidly. Relevant government departments have introduced various preferential policies to support the financing of SMEs, encouraging financial institutions to lend to SMEs. In the application principle, this paper expounds the fundamentals of enterprises and credit projects can be in five elements of fire, soil, metal, water, wood represented by the properties, divided into their five elements. These five elements maintain the balance between business fundamentals and the status quo of credit projects through a relationship that is both promoting and binding. This paper further points out that this relationship can be used to carry out loan risk assessment, and establish interplayed credit decision-making model for reasonable credit decision-making. According to the conclusion of empirical research, this paper illustrates that credit personnel can clarify their thinking and improve their efficiency by conducting enterprise investigation according to the interplayed theory, and credit institutions can make credit decisions according to interplayed credit decision-making model, which can establish a unified evaluation and decision-making standard, enhance the rationality of decision-making, and effectively reduce the loan risk rate of credit institutions