Guarantee network
Guarantee network, also known as networked-guarantee loans, is a widespread financial phenomenon in East Asia. Groups of small and medium-sized enterprises are allowed to back each other to obtain loans from commercial banks. In this process, the guarantor takes the legal obligation to repay the loan if its borrower defaults. When more and more companies are involved, they form complex loan networks, called the guarantee network, and their loans are named networked-guarantee loans.
References
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