Consider The Participant's Fair Preference For Self-financing Credit Chain Financing

Small and medium enterprises are constrained by financing problem though play an more and more important role in the economic development. So the small and medium enterprises can develop well only when the financing difficulty is solved. Many scholars tried from many aspects including self-liquidating credit chain financing, the one that is effective, easy to implement and able to realize multi-wins. This article explains the characteristics and feasibility of self-liquidating credit chain financing qualitatively and quantitatively. And then consider the affect of participants’ fairness preference on the decision makers’ decision making and expected effect by combining the FB model in behavior economics.Firstly, consider the supply chain including one retailer(is a small and medium enterprise and faces financing difficulty) and one supplier(a big company) based on the news vendor model. Assume that the retailer’s effort level can influence the market requirement. It is proved by the model and example analysis that the capital-restricted retailer will pay more effort and high the order quantity if he can get loan from banks,which results in higher expected effect of all participants.Then consider the influence of participants’ fairness preference on the decision making and expected effect. FS model believes that the decision maker not only consider its own effect but also consider other participants’ effect when he makes decisions. In the fourth chapter, three models separately considering the retailer’s fairness preference, the supplier’s fairness preference and both the retailer’s and the supplier’s fairness preference are established. From qualitative and quantitative analysis it is obvious that when the retailer’s fairness preference is considered, though the supplier’s optimal buyback price is lower, the retailer’s effort level and order quantity are increased, which results in the higher expected effect of the retailer, the supplier and bank. When the supplier’s fairness preference is considered, the supplier’s optimal buyback price increases, and the retailer’s effort level and order quantity are increased, which results in the higher expected effect of the retailer and bank. Though the supplier’s expected effect is lower because of high buyback cost, the expected effect of the whole credit chain(includes the supplier, retailer and bank) increases. When the fairness preference of both the retailer and the supplier are considered, the expected effect of the whole credit chain will be influenced.