The Systemic Risk Induced by Mutual & Professional Guaranty Models

It is obvious that the guaranty chain crises are harmful to regional financial stability.Lots of suggestions on improving regulatory rules have been proposed based on some investigations,but attention to the systemic risk is not paid to reveal the essence of the crises.Mutual guaranty and professional guaranty are available for enterprises to obtain loans from banks.However,different guaranty networks can be evolved into by choosing different guaranty models,resulting in different risks.The network induced by mutual guaranty model has the fragility of mutual loss,while that of professional guaranty model is immune to the random errors.This is the essence of guaranty chain crises.