The role of guarantee companies is to provide guarantee, take the form of liquid collateral offered to support for and facilitate corporate financing. This paper firstly studies and establishes model of guarantee-default using only information specific to borrower whose corresponding probability schedule of default reflects strategic information. Secondly, the paper expounds that credit is rationed by quantity, causing its equilibrium price to be higher than what comes from the equilibrium of supply and demand. Thirdly, this paper shows a model of estimating a guarantee rate to implement guara...
