Abstract
This paper investigates the efficiency of buyer lending in a supply chain with a retailer and a capital-constrained supplier subject to spectral risk measures. We show that the retailer should always charge the supplier the lowest possible interest rate under the buyer lending scheme. The retailer is better off in the buyer lending scheme than in the bank lending scheme if he is risk-neutral or risk-seeking, regardless of the supplier’s risk attitude, internal capital, and bankruptcy costs. However, the retailer’s preference switches to bank lending as his risk-aversion increases to a certain level. A comprehensive comparative statics analysis is provided.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
