Interest Rate Decision For The Stochastic Price Fluctuation In Inventory Financing

In the credit crunch environment, the supply chain finance helps small and medium-sized enterprises borrow money more easily from more lenders with lower cost. And inventory financing is one of the most representative modes. With the rapid development of economy, more risk problems in the inventory financing business are exposed, and financial loan institutions pay more attention to key indicators of risk control such as interest rates and mortgage rate. With the marketization of interest rate, the interest rate decision has become the focus of those key indicators.Different from the existing research in univariate decision model based on interest rates, this paper established the dual variable decision model of interest rate and mortgage rate, and analyzed the interest rate decision problem based on dynamic mortgage rate. According to inventory financing business risk value of different transaction stage, the paper established multi-stage financing model to get the dynamic interest rate, which can better reflect the level of risk in the inventory financing business. Meanwhile, negative correlation between the interest rate and the mortgage rate is also reflected in the practice of risk control.Taking the price of Chengdu screw steel (HRB400, φ14) as a reference sample, and through the analysis of the data, the paper gets different mortgage rate and interest rate for each financing transaction stage. Compared to the single stage financing model, the dynamic interest rate can be able to reflect the risk level of different financing stage, which leads the borrower’s loan costs to be lower, and helps the financing amount increase with lower financing risk. If the risk limit is not exceeded, the multi-stage financing model is easier to raise the enthusiasm of lenders and borrowers.