The decision mechanism of banks´ credit risk based on information asymmetry

To study the credit risk for banks, we consider the problem direct from the losses or the opportunity losses to credit funds point of view. The paper utilizes the idea of nonlinear programming to establish the decision model of credit risk for banks. We study the decision mechanism of credit risk for banks respectively in credit markets on information asymmetry when there are two types of loan entrepreneurs with high risk and low risk respectively in society. We obtain the two concrete decision mechanism of credit risk and gave their detailed processes of the proof. The result of study show that banks can efficiently identify both the risk types to the two types of loan entrepreneurs and the extent lying to reporting risk information under the mechanism´s action. By utilizing mechanism, banks can control risk to minimum