Lending relationship analysis of micro-loan company on game theory

Soft information is the basis of decision-making and loan pricing in relationship banking. Being a new type of commercial microfinance organization in China´s rural financial market, the lending technology of micro-loan company is relationship banking, loans credited to clients based on soft information collected by loan officers. For the sustainable development of micro-loan company, The paper examined the lending relationship of micro-loan company with perfect and imperfect information on game theory. The results show that the key factor for micro-loan company to avoid trapping into prisoner´s dilemma and loan losses is the sufficiency and accuracy of acquired soft information. Establishing long-term and exclusive relationship with loan clients within a certain time is the only way for micro-loan company to obtain soft information indeed.