Research On Inventory Financing Decisions-making With Core Enterprises, Buy-back Guarantee

Faced with increasingly fierce market competition and price risk, the traditionalinventory financing business is shocked, banks urgently need to develop new inventoryfinancing model to expand their business and control credit risk. Given the inventorypledge financing business under core enterprise buy-back guarantee is more commonlyused in recent years, we find mobility of collateral and probability of repayment to bankloan increased and bank’s pledge risk reduced. Therefore, this business model catchesmany banks’ eyes.Inventory financing model shift increases the number of participants anddecision-making, this model including a core enterprise, a bank, a logistic and aborrower. In order to expand the overall income and control risk, they must share profitsamong the participants according to business model process, which also requireparticipants to make critical attribute decision. This article analyzes and discusses thebank’s loan-to-value ratios and the core enterprise’s buy-back ratios decision problemquantitatively based on this model to control risk and balance the distribution ofbenefits.This paper regards bank and logistic companies as a community of interests, thenresearches inventory financing decision problem under core enterprise buybackguarantee and provided the borrowers with capital constraints. First, we build expectedreturn model under banks’ down-side risk control and derive actual loan-to-value ratios,then analyze market demand distribution characteristics of loan-to-value ratios. Further,we consider the bank’s loan-to-value ratios decision problem under random fluctuationsof price, then reveal the relationship between the buy-back ratios and loan-to-valueratios. At last, we extend the parties participated in decision-making to tripartite, andanalyze the impact of buy-back ratios on the expected benefits of the three parties, thenfind that the buy-back ratios priced by Nash equilibrium is more equitable and principle.The results can provide a reference for risk management and benefits distribution underinventory pledge financing business with core enterprise guarantee.