Supply Chain Financing Incentive Mechanism Based On Principal-Agent Theory

Nowadays, small and medium enterprises (SMEs) are the backbone of promoting the national economy's healthy and harmonious development, and it is an important guarantee for social stability. But now the development of SMEs is facing difficulties in financing. Due to the small size of SMEs, the poor credibility, the low self-financing capacity and other reasons, it is difficult for SMEs to obtain financing from a bank or financial institution. To some extent, the appearance of supply chain finance financing models alleviates the financing difficulties of SMEs.Supply chain finance financing model is an innovative financing model. Inventory financing, accounts receivable financing and prepayments financing are the three most important supply chain financing business. Supply chain financing business is a win-win business. It involves bank, the core enterprise, SMEs and other subjects in supply chain financing business. On the one hand, supply chain finance alleviates the financing difficulties of SMEs; on the other hand, supply chain finance can provide a new profit growth point for the bank or financial institution to create more profits; at the same time, third-party logistics companies and other enterprises will participate in the supply chain financing process, thus opening up new business.There are typical principal-agent relationships in the three booming supply chain financing business. It exits information asymmetry widely between the principal and the agent. Therefore, the principal needs to design appropriate incentives to encourage agents to work hard. In the research of supply chain financial incentives, it considers less agent's reputation effect, and the principal-agent model is short-term model, rarely considering principal and agent long-term cooperation. Therefore, the background of the paper is inventory financing, accounts receivable financing, prepayments financing. It establishes the long-term principal-agent model considering agents reputation effect. And it compares the long-term principal-agent model considering agents reputation effect and not considering it by numerical examples to verify the validity of the model. The results showed that:after considering reputation effect, the single-income of principal rises, effort of agent raises. While in different supply chain financing models, the fixed remuneration and incentive coefficient show different trends.