Navigating default risk in supply chain finance: Guidelines based on trade credit and equity vendor financing

Sun, Shuxiao; Hua, Shengya; Liu, Zhongyi

doi:10.1016/j.tre.2023.103410

Cited by 4 publications

(1 citation statement)

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“…Based on a dyadic panel data set that linked U.S. suppliers with their major buyers, Lee et al [41] studied how trade credit responds to various types of competition in supply chains, as well as the impact of trade credit on firm performance. Sun et al [42] proved that a portfolio of trade credit and equity vendor financing can coordinate the channel and lead to a win-win situation while maintaining each firm's downside risk control. Jani et al [43] confirmed that trade credit has a substantial impact on the retailer's regular ordering policies before raising prices.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Capital Position and Financing Strategies on Encroachment in Supply Chain Dynamics

Zhu,

Wang,

Zhang

2024

Mathematics

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Channel encroachment and financing decisions are prevalent in practice. Utilizing the Stackelberg game framework, we investigate the impact of a retailer’s capital position and financing strategies on supply chain dynamics in which a supplier considers establishing a direct sales channel. We find that the retailer’s equilibrium financing strategy is impacted by demand volatility and the initial working capital. The supplier’s encroachment decision hinges on the entry cost when neither trade credit financing nor bank credit financing is available. When both types of credit are available, the choice of financing is a complex interplay involving initial working capital, entry cost, and demand volatility. Notably, the supplier’s decision to encroach may shift from a binary stance of either encroaching or not encroaching, or it may oscillate from encroachment to non-encroachment and back to encroachment, particularly with an increase in demand volatility when the entry cost is moderate. The novelty of this study lies in its integration of supplier channel decisions with retailer operational decisions and financing strategies, examining how the capital position and financing strategies impact channel decisions. This study provides managerial insights into the interplay between supplier’s channel dynamics and retailer’s financial considerations, shedding light on unexplored aspects of channel management. In future studies, some assumptions in this study can be modified to obtain more managerial insights.

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Section: Literature Reviewmentioning

confidence: 99%