Research On Commercial Bank Inventory Impawn Financing Risk Management

This paper reviews the theory of supply chain, supply chain finance,and risk management. Supply chain finance including three modes, theyare accounts receivable financing, confirming warehouse financing, andaccommodating warehouse financing. The latter two belong to inventoryimpawn financing. After analyzing inventory impawn financing and itsoperation mechanism, the author described a few elements leading to riskof this model.This research took many reasoning methods such as thecombination of practice and theory, comparative research, case studies,statistical analysis and so on. The author combined some cases of thedomestic commercial banking sector causes of the inventory impawnfinancing risk in recent years, and analyzed the causes of risk with thesecases, further summarized in four types of risks. These four types of risksmainly include market risk, credit risk, legal risk and operational risk.In order to prevent the risks mentioned above, the author thinks following measures can be adopted. Hedging can be used to hedge therisk caused by high volatility of inventory price. Detailed audit, as well asthe motivation system, could be employed to avoid the credit risk ofco-operative enterprises. If outsourcing is used appropriately, the legalrisk caused by the imperfection of the law will be reduced, which thecommercial banks will take the benefit of. Also, there is no doubt that theoperational risk will be minimized, thanks to the strict management andthe improvement of the electronic techniques. Nowadays, the supplychain finance risks, which the commercial banks bear, are quite enormous.In this circumstance, it does make sense to discuss the methodscontributing to the lower risks.