The regulation of Commercial paper market based on evolutionary game analysis

Yang Guo, Hua Fang


The commercial paper market is used by commercial banks, nonbank financial institutions, and nonfinancial corporations to obtain short-term external funding. There are two main types of commercial paper: unsecured and asset-backed. Unsecured commercial paper consists of promissory notes issued by financial or nonfinancial institutions with a fixed maturity of 1 to 270 days, unless the paper is issued with the option of an extendable maturity. Unsecured commercial paper is not backed by collateral, which makes the credit rating of the originating institution a key variable in determining the cost of issuance. In recent years, China's paper business has developed rapidly, we saw a geometric Series upward in this market and the cumulative acceptances amount has up to 25 trillion RMB. Short-term financing market become prosperous to some extent, but it also brings some problems. This paper analysed the behavior of company and the bank or other discount capital provider according to the evolutionary game theory. In the end, normative research results and suggestions are given regarding policy-making in CP market supervision.


Commercial paper; Illegal issuance; Banking supervision; Discounted demand

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