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Comparative analysis of risk control in logistics and supply chain finance under different pledge fashions

Author

Listed:
  • Yixue Li
  • Shouyang Wang
  • Gengzhong Feng
  • Kin Keung Lai

Abstract

Inventory pledge financing is the core mode of logistics and supply chain finance in China, which can effectively solve financial bottlenecks in supply chains and has significant scope to develop. However, it is seriously constrained by the level of risk control. Given the randomly fluctuant character of prices of pledged inventories, this paper analyses decisions of the core risk control indicator, i.e. the loan-to-value ratio in static pledge and dynamic pledge fashions. In static pledge, this paper adopts the risk estimation strategy of 'corporate and debt' and analyses the loan-to-value ratio decision of downside-risk-averse banks when distribution of inventory price at the end of the loan period follows general distribution and several special distributions. Based on the total value balance mode in dynamic pledge, this paper establishes a loan-to-value ratio decision model for downside-risk-averse banks when pledged inventory is a standard commodity. Then, this paper extensively analyses the characteristics of risk control in logistics and supply chain finance under different pledge fashions.

Suggested Citation

  • Yixue Li & Shouyang Wang & Gengzhong Feng & Kin Keung Lai, 2011. "Comparative analysis of risk control in logistics and supply chain finance under different pledge fashions," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 5(2/3), pages 121-144.
    • Handle: RePEc:ids:ijrevm:v:5:y:2011:i:2/3:p:121-144
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    Citations

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    Cited by:

    1. Marak Zericho R. & Pillai Deepa, 2021. "Supply Chain Finance Factors: An Interpretive Structural Modeling Approach," Journal of Management and Business Administration. Central Europe, Sciendo, vol. 29(1), pages 88-111, March.
    2. Lou, Zhaohui & Xie, Qizhuo & Shen, Jim Huangnan & Lee, Chien-Chiang, 2024. "Does Supply Chain Finance (SCF) alleviate funding constraints of SMEs? Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    3. Zericho R Marak & Deepa Pillai, 2018. "Factors, Outcome, and the Solutions of Supply Chain Finance: Review and the Future Directions," JRFM, MDPI, vol. 12(1), pages 1-23, December.
    4. Wang, Zhiqiang & Wang, Qiang & Lai, Yin & Liang, Chaojie, 2020. "Drivers and outcomes of supply chain finance adoption: An empirical investigation in China," International Journal of Production Economics, Elsevier, vol. 220(C).
    5. Chakuu, Sumeer & Masi, Donato & Godsell, Janet, 2019. "Exploring the relationship between mechanisms, actors and instruments in supply chain finance: A systematic literature review," International Journal of Production Economics, Elsevier, vol. 216(C), pages 35-53.

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