Default Risk Assessment And Prevention Of The Supply Chain Finance

The SMEs in China develop rapidly in recent years and play a vital role to the development of Chinese economy and society. It is clearly stipulated in the report of the18th National Congress of CPC:SMEs and smallµ businesses are the driving forces of Chinese economic development as well as the most innovative "economic cells" in market-oriented economic system, however, the development of which has fall into the state of dilemma due to such problems like financial crisis and the those emerging from themselves, and among which the biggest issue is the difficulty of financing. And the supply chain finance is one of the emerging financial businesses which has been greatly developed by lots of Chinese internal commercial banks in recent years, which has gradually been in the spotlight of enterprises, banks and academic realize as a new finance product like the new business growth point and resolving the difficulty of financing to SMEs. Presently more than ten banks have operated the supply chain finance business, in accordance with the prediction of report of Shenyin Wanguo, the finance balance scale of the whole supply chain finance business in the year of2011is5.75trillion yuan,and it will probably reach to6.9trillion yuan in the year of2012with the growth rate of nearly20%.The financial requirement exists in supply chain finance itself will produce the derivatives of savings and the intermediate business incomes, and which will increase the enthusiasm of commercial banks to develop the supply chain finance. It calls higher capacity of risk management in banks with the rapid expanding scale of supply chain finance business. The banks still face tremendous default risk due to the inherent specific characteristics of SMEs as well as the immature development of supply chain finance although which may reduce the information asymmetry. And it calls higher capacity of risk management to banks with the application in internal banks in the future of The Basel Agreement â…¢, as the important part of the agreement, the default risk has also drew the bank’s attention through utilizing more scientifically advanced model to assess and guard against the default risk. For the time being there are many researches by scholars home and abroad with more qualitative research but less quantitative research, and the quantitative research concerning the Chinese supply chain finance default risk is little. In view of this and starting from the perspective of commercial banks, combining the operation mechanisms of supply chain based upon the other’s research with the expectation of exploring the methods of assessing the default risk of supply chain finance. The main contents of this dissertation has been divided into three parts:The Part One firstly analyzing the connotations of supply chain finance and clarifying the relevant conceptions. And it puts forward the concept of default risk of supply chain from the perspective of banks with a systematic summary of relevant theories concerning the default rate assessment with the aim of laying the theoretical basis to the research of the whole dissertation.The Part Two studies the causes of default risk emerging from the concrete financing models of supply chain finance as well as setting the default risk assessment index for the causes of risk according to the operation mechanisms of supply chain finance. The author of this dissertation concludes such methods of grey statistical method, factor analysis and Logistic regression which are appropriate to assess the default rate risk through comparative analysis and establishes realistic basis for the empirical research of this dissertation.The Part Three carries out the empirical analysis to the default risk model like advance payment and measures the results research models adaptability combining with the default risk, it studies relevant precautious measures according to the risk points existing in the different financing models of supply chain finance, among which it has given a consideration of the significance of option contract to control default risk facing the characteristic of advance payment financing model.The dissertation has carried out an exploratory research for the commercial banks to construct the comprehensive and feasible default rate assessment mechanism to SMEs in the supply chain finance, and definitely it will positively promote the banks to strengthen the default risk management of the supply chain finance.