Research on Trade Credit Spreading and Credit Risk within the Supply Chain

Abstract

Capital constraints in the supply chain have linked trade credit to the banks’ credit risk exposure. This paper focuses on how trade credit, which is widespread in the supply chain, affects the banks’ risk exposure by constructing a two-echelon Stackelberg framework in a case involving supplier dominance. A numerical analysis illustrates the following: First, the contagion intensity, which measures trade credit’s impact on the banks’ risk exposure, positively relates to the uncertainty of demand. Second, the retailer’s characteristics have a significant, moderating effect on this positive relationship between the banks’ risk exposure and the uncertainty demand. Finally, suppliers can reduce the contagion intensity by screening different types of retailers, which consequently decreases the banks’ risk exposure.

Research on the risk transmission mechanism of international construction projects based on complex network

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Assessment of associated credit risk in the supply chain based on trade credit risk contagion

“…As economic globalization progresses, supply chains are becoming more and more complex, encompassing various industries and regions as well as multiple members and relationships. At present, a supply chain has evolved into a complex system composed of multiple interconnected firms [ 1 ]. The interrelationships among firms in the supply chain have led to credit contagions from one firm to another and have formed the contagion network of the associated credit risk in the supply chain [ 2 ].…”