Financial Credit Risk Of Listed SMEs In Supply Chain Services

Supply chain financing was significantly developed and promoted since 1980 s and it was firstly appeared in the United State. The Shenzhen Development Bank started its supply chain financing business from year 2005 and it was the sign that the supply chain financing entered into the Chinese market formally. Currently, the most of business banks are not sophisticated on handling credit risks in this area. In this circumstance, the supply chain businesses are expanded slowly. Consequently, systematic researches on how to deal with the credit risks of the supply chain financing of the medium-size and small enterprises in the tertiary industry are significant to developing an effective and efficient financing market.The credit risks in the supply chain financing business can be divided into the industry chain credit risk and the enterprises interior credit risk. These credit risks are unpredictable, transmissible, uncontrollable and catastrophic. By December 2014, the loan’s remaining balance of Chinese banking organizations was 3945.356 billion RMB and 63% of this balance was relevant to the supply chain financing business. As a result of the imperfect legislation system in the tertiary industry, the unsuitable enterprises’ governance and capital structure, the unstable debt services ability and the ineffective internal control of enterprises, the supply chain financing credit risks of the medium-size and small enterprises in China excess the acceptable level and it is one of the largest obstacles of constructing a highly growth and healthy supply chain financing market. This paper adopts the Z-score system which is invented by a Swedish economist Altman to evaluate the Chinese A-share markets statistically. There are 63 companies which are from the catering industry, the hospitality industry, the retail industry and the entertainment industry having been chosen as the investigation sample. The result shows that there is only 20% of the medium-size and small enterprises in the tertiary industry owning a good credit risk condition’s record in the supply chain financing business. By building the logistic measurement model according to the data from 30 listed companies which are contained in the product catalog of the Wanda Group in the catering industry, the hospitality industry, the retail industry and the entertainment industry, we obtained the accurate estimated probability of the credit risks and the evaluation method of the supply chain financing credit risks. Referring to the investigation, we conclude that if the estimated probabilities P of these medium-size and small enterprises are less than 0.5, these enterprises should be defined as high risk companies and the banks need to consider cautiously about offering commercial loans to them. If the estimated probabilities P is greater than 0.5, the credit risks of these companies are low and remaining at an acceptable level. The banks could consider approving commercial loans to them.Since the existing problems in the supply chain financing business on managing credit risk of the medium-size and small enterprises in the tertiary industry, it is necessary for us enhancing the credit risk management of these companies by improving the relevant legislations, regulations, the credit risk management system and the ability of reducing credit risks.