A GAME-THEORETIC MODEL OF THE OPTIMIZATION OF THE INTERACTION OF FINANCIAL STRUCTURES AND START-UP IN SMALL BUSINESS
Journal Title: Проблеми системного підходу в економіці - Year 2018, Vol 4, Issue 66
Abstract
Recently, the issue of financing start-up projects, especially in small business, is becoming increasingly important. Private entrepreneurs and entrepreneurs-innovators have not so many real ways to fund their projects. Ordinary bank loans are the fastest way to get the necessary funding, but the problem lies in high lending rates on ordinary loans and financial strength of the lender in the form of a high pledge. At the same time, it should be noted that when financing start-up projects funds are provided by various commercial financial institutions, as a rule, not a percentage of the body of the credit, but as a partner of the project on the right to participate in profits. This is due to the fact that the risk of not successful start-up projects is more than 95%, but successful projects are so financially successful that offset not only failing projects but also bring significant financial gains that are not consistent with the initial financial cost. Given this situation, the main problem today is to optimize the interaction of financial structures and start-up in small business. The game-theoretic model as to the optimization of the interaction of financial commercial structures and small enterprises in the sphere of start-up projects financing is developed in the work. The conditions, under which such financing is balanced by the Nash and is beneficial both for commercial structures and for small businesses, are identified. It has been mathematically proved that a financial institution will only benefit from financing start-ups only if the probability product of a successful start-up completion on the average return to the financial institution after the successful completion of the start-up will be greater than the profit received from the provision of an ordinary lending operation taking into account the factor of time. On the basis of the developed static game-theoretic model, it is proved that the choice by a financial institution to provide financing start-up for the revealed condition is Nash equilibrium as a method of self-regulation of systems of any complexity level. The practical application of the developed model will allow financial institutions to quantify their prospects for providing start-up financing based on either their own statistical information or statistics of other similar financial structures, which will significantly improve the decision-making and reduce the risk of financial failure. Also, the use of this model will increase the percentage of financing by commercial start-up projects offered by small businesses, increase the overall profit of both commercial structures and small innovative enterprises, improve the investment climate in the country, and promote the development of innovation sphere of the domestic economy, as well as simulate an increase in the number of small enterprises engaged in the development and implementation of innovative start-ups.
Authors and Affiliations
L. O. Nikiforova, Dong Xinying
Keywords
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- EP ID EP562179
- DOI 10.32782/2520-2200/2018-4-27
- Views 120
- Downloads 0
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