Research On The Optimization Of Loan-to-Value Ratios In Exporting Offshore/In-Transit Inventory Financing

Since the financial crisis,logistics financial services such as inventory financing have been continuously deepened.International trade and cross-border e-commerce are also developing.Linking onshore and offshore inventory financing businesses organically can solve the financing difficulties for EXIM SMEs.How to achieve this goal has become an important new issue for shipping logistics companies in responding to market competition and innovating supply chain value-added services.The exporting offshore/in-transit inventory financing(hereinafter referred to as EOIIF)is a new sea-land joint pledging mode of supply chain finance.It combines EXIM trade with maritime logistics,and has the characteristics of transnational pledging process and extended pledging period.EOIIF can not only relieve SMEs in terms of a shortage of funds for export trade,but also bring new types of profit growth points for shipping logistics companies.However,in the sea-land joint pledging process of EOIIF,the shipping logistics company faces some risks including collateral value fluctuations,SMEs' credit risks and default risks.It is necessary for the shipping logistics company to set a scientific and reasonable loan-to-value(LTV)ratio to control the risks and increase its profit.Therefore,it is of great theoretical and practical value to study the optimization of the LTV ratio in EOIIF.This paper addresses an optimization problem of the LTV ratio in EOIIF.Supply chain system global optimization theory,double Stackelberg game theory,and the conditional probability principle under EOIIF are comprehensively applied.The series of optimization models for EOIIF have been progressively constructed in four scenarios,including demand fluctuations,price fluctuations,demand-price linkage,and credit lines and double default probabilities.The research conducted in this article is summarized as follows:Firstly,the issue of LTV ratio optimization in EOIIF under demand fluctuations is studied.By analyzing the performance of a shipping logistics company,an exporter and an importer under demand fluctuations,the three parties' expected profits and total profits of the whole supply chain under different circumstances are obtained.Reverse induction method is used to deduce the optimal LTV ratio.The above research shows that under uncertain demand,shipping logistics companies should set a reasonable LTV ratio based on different game strategies and the changes in the prices of goods purchased and sold by importers and exporters,in order to increase the overall benefit of the supply chain.Secondly,the issue of LTV ratio optimization in EOIIF under price fluctuations is studied.By analyzing the probabilities of the events occurred in EOIIF under price fluctuations,a piecewise function model of a shipping logistics company's expected profit is established.The analytical method is used to solve the model and obtain the optimal LTV ratio.This research shows that:(?)When the exporter needs multiple loans,the shipping logistics company should pay close attention to the changes in the collateral price at the beginning of each loan period.It should decrease(or increase)the optimal LTV ratio according to the increase(or decrease)in the price.(?)When the exporter's default probability increases(or the exporter's repayment duration extends,the financing service fee rate is relatively high),the shipping logistics company should set a lower reasonable LTV ratio.Otherwise,it should set a higher reasonable LTV ratio.(?)The shipping logistics company should make a prediction on the price discount of the remaining collaterals,and increase(or decrease)its optimal LTV ratio with the increase(or decrease)in price discount to avoid risks and increase profit.Afterwards,the issue of LTV ratio optimization in EOIIF under the fluctuations of both demand and price is studied.Based on the assumption that the collateral price obeys the law of geometric Brownian motion and has a linear negative correlation with demand,the issue of LTV ratio optimization is addressed.By analyzing the probabilities of the events occurred in EOIIF,a piecewise function model of a shipping logistics company's expected profit is established.The numerical approximation method and the analytical method are applied to obtain the optimal LTV ratio.This research shows that when the exporter needs multiple loans,the shipping logistics company should pay close attention to the changes in the price and quantity of the pledged goods at the beginning of each loan period.It should decrease(or increase)the optimal LTV ratio according to the increase(or decrease)in the price and pledging amount,or adjust its loan principal to the exporter for maximum profit.Finally,the issue of LTV ratio optimization in EOIIF based on credit line and double default probabilities is studied.In EOIIF,the shiping logistics company usually faces three main kinds of risks,including the credit risk of exporters,the exogenous default risks of exporters and importers,and the value fluctuation risk of collaterals.Given the exporter's credit line and the exogenous default probabilities of the exporter and the importer,two optimization models are established based on the double Stackelberg game theory.The first model is a function between the importer's order quantity and the exporter's wholesale price.The second model is a function between the exporter's wholesale price and the shipping logistics company's LTV ratio.Reverse induction method is used to solve the models and derive the optimal LTV ratio.This research shows that:(?)The shipping logistics company should consider he default risks of both the importer and the exporter to obtain higher expected profits.(?)The shipping logistics company should assess the exporter's credit level and previous default conditions.For the exporter with higher credit line or default risk,the shipping logistics company should set a lower LTV ratio;otherwise,the shipping logistics company should set a higher LTV ratio.(?)The shipping logistics company should promote the exporter and the importer to reach a binding agreement regarding to the importer's default penalty.It can increase(or decrease)the optimal LTV ratio according to the increase(or decrease)of the penalty coefficient,in order to increase it profit and reduce risks.The research enriches the results of the LTV ratio optimization under EOIIF,and expands the theory and methods of supply chain financial management.This paper applies the theory and methods of controlling risks in various situations to practical problems.Meanwhile,it has important practical guidance for shipping logistics companies and other financing parties to develop the offshore/in-transit inventory financing business.