Consideration about the Function of the Internal Control System in the Finance of Small and Medium-sized Businesses

This study has considered, by using the game theory, about the influence of maintaining good internal control system when small and medium-sized businesses receive loans from banks. The conclusion reached was that by maintaining good internal control system, small and medium-sized business managers can alleviate the asymmetric information that lie between the parties by allowing them to transmit a signal to the banks that they are trustworthy. Thus, banks should actively request the managers that seek loans to equip themselves with good internal control system as a prerequisite for obtaining the loans.村田省三教授、バスー・ディパック教授定年退職記念号In Honour of Prof. Shozo Murata and Prof. Dipak R. Bas