Finance-operations interface mechanism and models

Wu, Desheng Dash; Olson, David L.; Wang, Shouyang

doi:10.1016/j.omega.2019.01.008

Cited by 8 publications

(2 citation statements)

References 44 publications

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“…Furthermore, with the growing scale of trade credit and the expansion of credit markets, imperfections in the credit system may cause asymmetries in information to be further magnified (Chen et al, 2020). From the supply chain relational management perspective, trade credit is viewed as a long-term partnership that is not only an integral part of the supply chain contract, but also serves as a risk-sharing mechanism between suppliers and retailers (Wu et al, 2019), in which the supplier-retailer bond tighter compared to traditional relationships. At this point, it is more dangerous to provide trade credit to retailers who are unclear or have difficulties in obtaining accurate business information, therefore, the supplier's demand for retailers' operational information also strongly increases.…”

Section: Summary and Analysismentioning

confidence: 99%

The impact of information transparency on trade credit: the mediation role of risk

Yang

2022

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PurposeExisting literature demonstrates the important role of information transparency in enterprise development and market surveillance. However, little empirical research has examined the information transparency effect in supply chain management. This study aims to fill this gap by exploring the significant role of information transparency on supply chain financing and its mechanism, taking trade credit as the starting point.Design/methodology/approachFrom the data set comprising 3,880 Chinese firms with A-shares listed on the Shenzhen and Shanghai Stock Exchanges from 2011 to 2020, we obtain the basic picture of information transparency and trade credit. Panel fixed effects regression is used to test the hypotheses concerning the antecedents to trade credit.FindingsThe empirical results show that: first, information transparency can significantly support corporate access to trade credit and is found to facilitate financing by mitigating perceived risk. Second, among companies with higher levels of financing constraints, weaker market power and more concentration of suppliers, information transparency promotes trade credit more markedly. Third, the outbreak of COVID-19 causes a substantial increase in uncertainty and risk in external circumstances and then the effect of information transparency is weakened. Fourth, the contribution to trade credit is likely to be stronger for disclosures containing management transparency elements compared to single financial transparency.Originality/valueTo the best of our knowledge, this study is one of the first to explore the positive role of information transparency to supply chain financing, which to a certain extent makes up for the lack of information transparency research in the supply chain. It provides new ideas for enterprises to obtain trade credit financing and promote the improvement of supervision departments’ disclosure policies.

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Section: Summary and Analysismentioning

confidence: 99%

The impact of information transparency on trade credit: the mediation role of risk

Yang

2022

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“…For instance, UPS founded UPS Capital to provide in-transit inventory financing services, and Schneider Logistics Inc. collaborated with U.S. banks to provide better financial solutions to its capital-constrained clients 1 . Because pledged inventory is not guaranteed to maintain its initial value (He et al, 2012(He et al, , 2014Wu et al, 2019), when providing inventory financing services, an IFP sets an impawn rate to control the financing risk. The impawn rate is the ratio between the loan ascribed to the collateral and the market value of the collateral.…”

Section: Background and Research Questionsmentioning

confidence: 99%

Impawn rate optimisation in inventory financing: A canonical vine copula-based approach

Zhi

Wang

2020

International Journal of Production Economics

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In the inventory financing business, an optimal impawn rate (loan-to-value ratio) can help the inventory financing providers (IFPs, she) maintain competitiveness in the inventory financing market. However, the literature has been silent on how IFPs can optimise the business through the optimisation of the impawn rate. This study examines the role of the optimal impawn rate in the inventory financing business. The key to setting the optimal impawn rate is first evaluating default probability and then incorporating this into the profit function. We use a data-driven approach to explore the copula model in setting the optimal impawn rate. Through numerical analysis, we find that the Clayton canonical vine copula has a better performance for the prediction of default probability than the multivariate normal distribution (MVN) and can thus be used to evaluate default probability. In addition, we uncover that setting multiple impawn rates for different collaterals allows inventory financing to yield a higher profit. Further, although the interest rate, industrial impawn rate, and optimal impawn rate have strong effects on inventory financing profit, interestingly, the relationship between them is marginally diminishing.

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