Abstract
In today’s globalized economy, all the links of supply chain are interlinked. Most of the upstream raw material manufacturers or producers in the said chain are small- and medium-sized enterprises (SMEs) that provide the basis for the efficient operation of the whole supply chain. However, SMEs in China, especially those playing a pivotal role in China’s export-oriented economy at this stage, do not have access to the corresponding financial treatment. Supply chain finance provides a new perspective to solve this contradiction. Henceforth, this paper introduces modern financial engineering risk measurement tools to measure the financial risk in supply chain finance, specifically while evaluating the single financing business. Moreover, the chief objective of this paper will be the analysis of the characteristics and connotations of order financing business model. In addition, the focus will be to analyze the risk of order financing from the perspective of banks and other financial institutions. Additionally, this paper will use the CreditRisk + model based on insurance actuarial principles to manage credit risk in order financing business based on foreign currency settlement, in conjunction with the characteristics of supply chain finance and multinational supply chain. Furthermore, a risk measurement method for the application of order financing in multinational supply chains will be provided. Ultimately, the experiments show that the solution of this paper defines and analyzes the financial risks brought by order financing business to bank financing.
Highlights
In today’s globalized economy, all the links of supply chain are interlinked
The experiments show that the solution of this paper defines and analyzes the financial risks brought by order financing business to bank financing
Introduction e globalization of economy brings the globalization of manufacturing, and with the globalization of production, investment, and market, the transnational supply chain is formed by the collaboration, exchange, and operation of information flow, logistics, and capital flow among international organizations around the nuclear enterprises in transnational trade, and the whole supply chain starts from the upstream procurement of raw materials from one or more countries and makes intermediate and final products, and the global sales network sells the products to consumers all over the world
Summary
Received 15 October 2021; Revised 8 November 2021; Accepted 10 November 2021; Published 1 December 2021. E supply chain finance can provide a solution for these enterprises from a new perspective and bring a huge potential market for banks and other financial companies. China’s manufacturing industry is still in the status of “world factory” in this supply chain, and a large number of smalland medium-sized enterprises are responsible for the important production and manufacturing functions in this functional chain, but they have not received the corresponding financial treatment, many small- and mediumsized enterprises are facing the problem of difficult financing, supply chain finance can solve the problem of providing these enterprises with a new perspective, and at the same time, it brings a huge potential market for banks and other financial enterprises.
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