Supply Chain Financing Model with Data Analysis under the Retailer's Moral Hazard

Abstract

This study considers a two-echelon supply chain consisting of a core supplier and a capital-constrained retailer, and then investigated the impact of retailer's moral hazard under bank credit financing and trade credit financing through Stackelberg game model. We surprisingly find some interesting conclusions after theoretical and data analysis. Under bank credit, the possibility of retailer's moral hazard improves the profit of each participant and the supply chain financing efficiency; it also raises the supplier's wholesale price and retailer's order quantity with the increasing of realize from moral hazard. While under trade credit, the supplier will always maintain a fixed and high wholesale price, and the impact of moral hazard on the participants' decisions is related to the realize from moral hazard. Additionally, this study also examined the options of financing strategy. When the possibility of moral hazard is low, the optimal financing strategy is trade credit, and vice versa. Finally, the simulation analysis is conducted to verify the results of this research.