Investment-loan linkage refers to the way that banking financial institutions combine "credit extension" with "equity investment" in subsidiaries established by the group with investment functions. Through relevant institutional arrangements, investment income offsets credit risks and realizes scientific and technological innovation.

The matching of corporate credit risks and returns provides a financing model with continuous financial support for scientific and technological innovation enterprises.

In April 2016, the China Banking Regulatory Commission, the Ministry of Science and Technology, and the People's Bank of China issued the "Guiding Opinions on Supporting Banking Financial Institutions to Increase Innovation and Launch Investment and Loan Linkage Pilots for Science and Technology Innovation Enterprises" (Yinjianfa [2016] No. 14), clarifying

Five regions and 10 banks were selected as pilot projects to carry out investment and loan linkage business of commercial banks.

From a practical perspective, investment-loan linkage can be divided into internal linkage and external linkage.

Internal linkage refers to the linkage between commercial banks and their subsidiaries with investment functions to carry out business.

Currently, only China Development Bank can carry out internal linkage business through its subsidiary, China Development Bank Financial Co., Ltd.

Internal linkage improves business coordination and reduces costs due to the close connection between entities, but it can also easily spread risks, so more stringent risk and isolation mechanisms are needed.

External linkage refers to the linkage between commercial banks and entities with investment functions that are not directly established by the institution to carry out business.

It mainly includes linkage with group-controlled subsidiaries, cooperation with external venture capital institutions, indirect investment in scientific and technological innovation enterprises through credit extension to venture capital institutions, and the establishment of industrial funds.

There are various external linkage models, but because there are many subjects involved, conflicts between subjects are easy, so the coordination cost is also high.

In addition, from the perspective of investment model, "option" is also an important model.

The option model means that while providing loans, commercial banks sign an agreement with the invested enterprise, agreeing to hold certain income rights of the enterprise, and exercise or transfer them under specific conditions to realize income.

This model is currently developing rapidly.