Research On Strategy Of Inventory Financing Under Supply Chain Financing

In recent years, the financing problem of SMEs (small and medium-sized enterprises) hasbecome an international problem, especially in China. In fact, it is of great practicalsignificance for sustainable economic development to solve the financing problem of SMEs bymaking better use of the limited resources. Economic globalization has intensified competitionamong banks, some banks change the traditional credit mode commercial banks used to rate asingle enterprise in the past. These banks try to make full advantage of the characteristics ofthe supply chain transaction and the superiority of core enterprise to provide financial supportto SMEs from the perspective of whole supply chain. The development of Supply ChainFinance not only expands the clients for banks, but also brings a new idea for solving SMEsfinancial problems. Meanwhile, it brings more opportunities for logistics enterprise.This paper first reviews the basic theory of Supply Chain Finance, including the conceptand generation of Supply Chain Finance, financing models and related literature review, andthen focuses on financing model of inventory financing, presents theoretical models to analyzethe decision-making behavior of the bank, SMEs and logistics enterprise respectively.From the perspective of the bank and given the price is fluctuant randomly, Chapter3presents a model of the bank’s decisions on inventory impawn financing with downside riskconstraint, and analyzes the strategy of the bank when price distribution of the stock followsnormal distribution and logarithmic normal distribution. The results show that the bank’sexpected profit, the loan-to-value ratio of inventory financing have the contrary change trend to the initial price of the pledged stock and default rate while the loan ratio is equal to theregular interest rate.Given demand is stochastic, Chapter considers loan-to-value quantity of SMEs anddefault problem in four different conditions from the perspective of SMEs, i.e., SMEs haveenough funds and no buy-back guarantee, have enough funds and buy-back guarantee, have noenough funds and no buy-back guarantee, and have no enough funds and buy-back guarantee.In addition, the influence of loan-to-value ratio and loan term on the optimal loan-to-valuequantity and the effect of loan-to-value quantity on the probability of SMEs default areanalyzed. It is shown that the loan-to-value quantity has the contrary change trends to theloan-to-value ratio，interest rate and load term. But there is no perfectly linear relationship inprobability of default and buy-back.Chapter5presents static game model with logistics enterprise and bank, and presentsevolutionary game models with logistics enterprise’s honesty strategy and bank’s supervisionstrategy to analyze the interactive mechanism of financing strategy selection of bank andlogistics enterprise. It is concluded that one Nash equilibrium is founded in static game, andtwo evolutionary stable strategies are founded in the dynamic evolutionary system. When theoriginal values are located in different areas, the system will converge to a differentequilibrium point, which indicates that the initial value of parameter has a significant impacton the system’s direction.Finally, the whole research is concluded, the limitations and the further direction arediscussed.