Study On Supply Chain Financing Of Dual Credit Channels With Dominant Manufacturer

With the increasingly operational and market uncertainties in recent years,middle and small-sized enterprises has limited credit to loan from the bank because of a high possibility of loan defaults and bad loans.Acting as a substitute for bank credit,trade credit offers the opportunities financed from the partner in a supply chain,.In the absence of bank credit,offering retailers a permissible delay in payments is an effective way for suppliers to stimulate sales and reduce inventory as it represents a form of price reduction.Wal-Mart amounts to 75 percent of its total inventory(?38.5 billion)in the balance sheet on December 31,2015.Because of its wide usage,supplier financing has been realized as a promising field by researchers and practitioners.Based on this background,Contingent on that the manufacturer provides part of the trade credit,the retailer has to access the loan from the bank.Different from extant literature,the manufacturer offer a credit guarantee for the loan the retailer borrows from the bank.We model their strategic interaction as a Stacke lb erg game with the manufacturer as the leader.And the manufacturer decides the credit proportion.This paper deals with three issues:(i)the optimal decision and credit decision of the manufacturer and the retailer in the single credit channel;(ii)the optimal decision and credit decision of the manufacturer and the retailer in the dual credit channels;(?)The influence of the relationship between trade credit interest rate and bank credit interest rate.In order to solve the above three problems,this paper considers a risk sharing mechanism in Stackelberg games where the manufacturer teams up with the bank to provide the loan which equals the capital gap to the retailer.The manufacturer provides the credit guarantee for retailers if bankruptcy occurs.The manufacturer can choose financing methods for the retailer's decision-making.It mainly includes two types of financing:(?)the trade credit financing,that is,the retailer prepares part of the funds,and the manufacturer allows the retailer's remaining unpaid amount to settle after the sale;(?)The bank credit under the guarantee,that is,the retailer obtains bank loans from the bank,and then the manufacturer provides the credit guarantee for the financing.If the retailer goes bankrupt to repay the loan funds,the manufacturer will help the retailer return the remaining loan funds.In addition,retailers decide their own orders.Banks do not participate in the game process.The banks do not have the risk of loss of funds.This paper considers the combination of theory and empirical research method.Although prior research has been devoted to identify the conditional advantages of two distinct financing policies,trade credit and bank credit,the retailer with a financial constraint and the manufacturer may have the incentive to achieve advantage by incorporating the two policies simultaneously.The combination of two kinds of credit financing can significantly improve the manufacturer's expected profit.Then,through the empirical study,the trade credit interest rate is higher than the bank credit rate,and the combination of the two credit models on the optimal profitability of the manufacturer.Finally,we find that in the dual credit financing model,when the production cost is low,the manufacturer takes the lowest credit rate model for the best;when the production cost is higher,the manufacturer takes the higher credit rate of the credit model.And we give the practical significance of the model from the perspective of management inspiration,and provide countermeasures for the operation and financing of small and medium-sized enterprises.