This paper addresses China’s bank sectors lending to enterprises through a coalition framework. We set Chinese banks, MSEs, and SOE and public listed companies in a coalition game, and hence provide a solution to Chinese banking sectors’ lending strategy. Our findings suggest that either lending to MSEs or to SOE and public listed companies will not be beneficial. The coalition comprising of all the players is the rational, stable and fair solution. As such, large SOEs and public listed companies may receive bank loans at a lower price as MSEs’ offered. While MSEs may be priced out of the market after bidding up a lower price, with side payments from large SOEs and public listed companies. With sustainable financing, MSEs could continue to grow rapidly, and ultimately contribute to China’s economic growth.
ISSN: 1792-6599 (Online)