Research On Supply Chain Finance Risk Based On Revenue Sharing-bidirectional Option Contract

Supply chain finance is a new type of financing model for SMEs.Since the Shenzhen Development Bank launched its supply chain financing business in 2005,the supply chain finance has developed rapidly.However,with the rapid development of supply chain finance,there has also been a situation where banks cannot recover full loans due to the disruption of the supply chain's capital flow.Fraudulent financial operations such as the Shanghai Steel Trade case spread across the country,indicating that the supply chain finance needs to pay special attention to the balance between income and risk.In the supply chain financial risk management,the most important thing is to control the bank,s risks.However,the default of SMEs is an important category which lead to bank,s risks.In summary,how to use innovative means to solve the problem of limited funds for SMEs and control the default risk of retailers is a challenge.This is also the motive and starting point of this study.At the same time,with the increase of the awareness of financial risk management,signing the contracts to achieve mutual benefits has been continuously promoted.Therefore,this paper introduces the revenue sharing-bidirectional option contract into supply chain finance and designs a new business model.The core company's credit guarantee not only effectively solves the problem of loan constraints for the loan companies,but more importantly it improves ability that bank recover it's loan.However,the guarantee of the core company is limited to control the supply chain finance risk.Therefore,we need to use the assistance of external companies to diversify the bank business risks and ensure the bank's ability to recover full loans.With the help of the third-party logistics supervision companies and the option contractors,this paper will increase the ability to control the bank's risk and ensure the effective implementation of supply chain finance.In order to more clearly analyze the above business processes and seize the key factors affecting the bank's risk we will quantify the key risk control points by establishing a model and obtain the expected returns and optimal decision variables of companies and banks.At the same time we examine the impact of key risk control points on expected returns and parties' decisions.The default probability of the loan company,the key parameters in the contract and the decision parameters of the external company are the most important points in research.The study found that based on the introduction of revenue sharing-bidirectional option contract and the assistance of external companies,we can reduce the default probability of loan companies and guarantee the retailer,supplier and bank's income.In addition,the assistance of third-party logistics companies and option contractors can further reduce the default risk of retailer,increase the flexibility of enterprise decision-making,increase the income of banks and enterprises on the chain.In summary it plays an important role in controlling the financial risks of the supply chain.The difference between this paper and existing literature lies in:1.The default probability of the loan company is set as an endogenous variable,and the default probability of the loan company is calculated.Based on this,a more precise risk control strategy is obtained;2.The introduction of the revenue-sharing-bidirectional option contract model improved business operation process,at the same time,we takes into account the funding constraints of the loan companies and obtains the supply chain financial risk control strategy under this environment.