Research on the contagion effect of associated credit risk in supply chain based on dual-channel financing mechanism

Abstract

This paper considers a two-echelon supply chain with a supplier and a retailer both having capital constraints. The capital-constrained retailer first applies for loans from the commercial bank, and then applies for trade credit from the supplier. Compared with the single trade credit financing mechanism, what are the similarities and differences in the contagion and evolution of the associated credit risk in the supply chain when the retailer adopts both trade credit and bank credit (dual-channel financing) mechanism. Based on Stackelberg game analysis framework of the supplier and retailer, this paper clarifies the contagion mechanism of the associated credit risk in the supply chain and discusses the influences of financing structure, financing channel and financing costs on the contagion effect of the associated credit risk in the supply chain under dual-channel financing mechanism. Combined with the case simulation analysis, it is found that: Compared with the single trade credit financing mechanism, the contagion effect is weaker under the dual-channel financing mechanism. The financing structure significantly affects the contagion effect, which increases with the increase of the proportion of trade credit financing. Both bank credit and trade credit financing costs can positively affect the contagion effect. Our research can enrich the existing credit risk management and supply chain finance literature and provide decision support for the selection of financing methods and risk control of commercial banks and supply chain enterprises.