Bank Loan Financing Research Articles

Pricing and Financing Strategies of Dual-Channel Green Supply Chain with Risk Aversion and Consumer Preferences

Nowadays, considering the growing tendency of companies toward e-commerce as well as green production, dual-channel green supply chain management has become particularly important. This paper investigates pricing decisions within a dual-channel green supply chain framework while considering the capital constraints faced by risk-averse manufacturers. Simultaneously, the impact of the degree of risk aversion, consumer green preferences, and channel preferences on the optimal decision-making process of green supply chain members is analyzed. We address the issue of financial constraints faced by manufacturers through bank loans and trade credit financing and compare the two cases. Our findings illustrate that trade credit financing outperforms bank loan financing in the dual-channel green supply chain. Moreover, pricing decisions under different models are influenced by consumer preferences and risk aversion. Specifically, the greenness of the product, wholesale price, and sale price exhibit negative correlations with manufacturers’ risk aversion but positive correlations with consumer preferences.

Actions speak louder than words: Can credible green commitment facilitate bank loan financing? Evidence from China

AbstractOur study investigates whether credible commitment to corporate green behaviours influences corporate finance. Specifically, using the unique setting Green Manufacturing (GM) program in China, we examine whether and how green manufacturing certification (GMC) endorsed by the government could lead to an increase in firms' bank loan financing. We find that GMC increases bank loan financing, mainly through alleviation of banks' concerns of information risk and default risk potentially arising from environmental risk. Heterogeneity analyses show that the positive effect of GMC on bank loan financing is more pronounced for non‐state‐owned enterprises, firms in polluting industries, in less eco‐friendly regions, and in Green Finance Pilot Program regions. Our findings suggest that the government plays an important role in discerning and endorsing corporate green behaviours, and thus directing banks' financial resource allocation decisions.

Financing Mechanism Design of Small, Medium and Micro Manufacturing Enterprises with Capital Constraints in Different Life Cycle Stages

In order to solve the problem that manufacturers have sufficient funds when producing traditional products and lack of funds when producing green products, this paper considers three financing strategies: no financing, bank loan financing and internal financing, and constructs centralized decision-making and manufacturer-led Stackelberg game model. It is found that the wholesale price, production input, green input level and supply chain profit of the three financing methods are not optimal under the manufacturer-led decision-making. On this basis, aiming at the overall profit under centralized decision-making, this paper designs the combined contract of "revenue sharing contract + two-part cost + green cost sharing" to coordinate the supply chain, and puts forward the scope of optimal coordination of the combined contract under three financing models.

EFFECT OF BANK LOAN FINANCING POLICIES ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN TURKANA COUNTY, KENYA

<p>Loans are considered to be the basic source of financing Small and Medium Enterprises in developing countries like Kenya. However, the majority of SMEs continues to face challenges in obtaining loan facilities resulting in poor performance and closures. Hence, the study investigated the effect of bank loan financing policies on the performance of SMEs in Turkana County, Kenya. The study was guided by two research questions: In what ways do collateral requirements affect the performance of small and medium sized enterprises in Turkana County, Kenya? And how does financial information affect the performance of small and medium sized enterprises in Turkana County, Kenya? The study was anchored on correlation research design and targeted a population of 2037 licensed SMEs from different sectors in Turkana County. Stratified and simple random sampling techniques were employed to select a sample of 334 SMEs. A questionnaire for SMEs was used as the instrument of data collection that collected data on the independent and dependent variables. The research instrument was tested for validity and reliability before being taken to the field. Analysis of data was done through the quantitative method. Analysis of data to answer the research questions was done by using descriptive statistics; frequencies, percentages, means, and standard deviation. Data analysed was presented in the form of frequencies and percentages, mean, and standard deviation. The research result showed that there existed a significant negative effect of collateral requirements ( and performance of SMEs. However, the second null hypothesis was accepted (p>0.05) because leading to the acceptance that there was no significant effect of financial information on the performance of SMEs. The study concludes that loan financial policies had a significant effect on the performance of SMEs in Turkana County. The study recommends that financial institutions need to revise their loan financing policies to make them attractive to SMEs as they have been found to be influencing their performance.</p><p> </p><p><strong>JEL</strong>: L20; G21</p>

Impact of Firm Power on Debt Structure, Bank Loan Financing and Corporate Performance in China

Impact of Firm Power on Debt Structure, Bank Loan Financing and Corporate Performance in China

Pricing decision of dual-channel supply chain with members risk-aversion under the participation of e-commerce platform

In this paper, it considers a two-stage dual-channel supply chain model composed of a risk aversion manufacturer, a risk aversion retailer and a risk-neutral e-commerce platform. Under the condition of information symmetry, it is supposed that the manufacturer is financially constrained. Besides, the analysis is based on Stackelberg game theory. The equilibrium price without capital constraint is compared with the equilibrium price in three cases of e-commerce platform financing, bank loan financing and prepayment financing. Then the effects of risk aversion coefficients of the manufacturer and the retailer on equilibrium prices are compared in four cases. The influence of different financing rates on wholesale price, direct selling price and retail price is analyzed simultaneously.

The impact of COVID-19 on financing decisions of SMEs in Vietnam

The coronavirus disease (COVID-19) pandemic has had a massive impact on the economy around the world. To shed light on how COVID-19 is affecting the bank loan financing decisions of small and medium-sized enterprises (SMEs) in Vietnam, we conducted a survey with the participation of representatives come from 92 SMEs in Ho Chi Minh City, Vietnam in the period from March to April 2020. Employing logistic regression, we find that the risk perception of COVID-19 is a significant factor that helps predict SMEs’ bank loan financing decisions. This study not only contributes to management literature regarding firm’s financing decisions but also assists policymakers in introducing policies related to SMEs.

An Investment and Loan Financing Decision Equilibrium in Supply Chain

A financing model for bank loan financing, equity financing, and portfolio financing under the manufacturer's capital constraints is constructed, and the manufacturer's capital level and consumers are discussed in green preference on pricing, green input level, market demand for products, and selection strategies of financing methods. Finally, it is verified by numerical analysis. Consumers' green preference is positively correlated with retail prices, wholesale prices and the level of green investment efforts, market demand for products, and equity transfer ratios acceptable to both parties in equity financing; when the manufacturer's capital constraints are not financing, the manufacturer's initial capital level is positively correlated with manufacturer's wholesale price, and retailer's retail price are negatively correlated, but it is positively correlated with the level of green investment efforts; the greater the bank loan interest rate, the larger the manufacturer's acceptable share transfer ratio.

Firm climate risk, risk management, and bank loan financing

AbstractResearch SummaryWe estimate firm‐level physical risk from climate change based on managerial evaluation and firms' exposure to climate hazard events and find that climate risk results in unfavorable corporate financing terms related to bank loans (higher interest paid, higher likelihood of being required to collateralize the loan, and greater number of covenant constraints). Firms that take measures aimed at managing climate risk, including corporate climate strategy, board‐level governance, specific or integrated process to cope with climate change, climate opportunities, and climate policy involvement, are able to mitigate the negative impact of climate risk on loan contracting. We further find that higher climate risk level is associated with inferior financial performance and higher default probability, which potentially lead to more stringent loan terms.Managerial SummaryWe examine how a firm's exposure to climate risk affects its financing terms from bank loans. Climate risk exposure is assessed by firm managers and also reflects the degree to which the firm is subject to climate‐induced natural disasters. The results show that if exposed to higher climate risk, which hurts financial performance and heightens default likelihood, firms face higher interest rates and more stringent collateral and covenant constraints when borrowing from banks. Nevertheless, firm managers could significantly mitigate this adverse climate impact on loan financing by integrating climate change into business strategy, having the board take direct responsibility for climate change issues, establishing a climate change‐focused risk management process, seeking business opportunities from climate change, and engaging in activities that influence climate policies.

Dual-Channel Supply Chain Financing Operation Strategy Considering Free-Riding Effect under Different Power Structures

This paper considers a dual-channel supply chain consisting of a manufacturer and a capital-constrained retailer, where the retailer makes certain sales efforts and the manufacturer may hitch a ride on the retailer’s sales efforts. Deferred payment and bank loan financing models under Retailer- and Manufacturer-Stackelberg settings are established, respectively. The equilibrium price and sales effort strategies of both sides of the supply chain under two power structures and financing modes are obtained by the backward solution method, and then the influence of free-riding behavior and financing interest rate on equilibrium strategies is explored, as well as how the power structure affects the financing decisions of enterprises. The results show that deferred payment is more conducive to retailers’ sales effort and order volume, which is the optimal financing model for the retailers under each power structure. Power structure affects the initial capital threshold of retailers and the manufacturers’ financing decisions. The impact of free-riding behavior and financing rate on equilibrium prices exists and varies, depending on the power structure and financing model. Numerical simulation results show that manufacturers should give priority to publishing price strategies, while retailers should decide whether to give priority to publishing price strategies according to financing mode and cross-price sensitivity. This paper’s findings can provide valuable guidance for decision-making in financing, price, and sales effort for the capital-constrained dual-channel supply chain.

The Impact of Equity Financing on the Performance of Capital-Constrained Supply Chain under Consumers’ Low-Carbon Preference

The reduction in carbon emissions by industrial enterprises is an important means for promoting environmental protection and achieving sustainable development. To determine the impact of carbon emissions reduction on supply chain operation and financing decision-making, in this study we designed three financing strategies, i.e., bank loan financing, equity financing, and hybrid financing (a combination of bank loan financing and equity financing), for a manufacturer (leader) and a low-carbon supply chain composed of a capital-constrained retailer, constructed Stackelberg game models, solved the equilibrium results under each financing strategy using the reverse recursion method, and revealed the financing preference of the supply chain member companies through comparative analysis. The results showed that the increase in the consumers’ low-carbon preference and equity financing ratio have positive impacts on supply chain equilibrium, a result that is opposite that for the impact of the interest rate of bank loan financing; additionally, the abovementioned three factors jointly determine the profit of the manufacturer of the low-carbon supply chain, while the retailer’s profit is affected by the equity dividend ratio. Finally, we present the conditions for the financing preference of the manufacturer and the retailer. The findings of this study can provide references for low-carbon supply chain companies to make appropriate management decisions.

Optimal Financing Strategy in a Capital-Constrained Supply Chain with Retailer Green Marketing Efforts

The purpose of this research is to examine the green supply chain (GSC) financing decisions of manufacturers and capital-constrained retailers in order to establish a Stackelberg game model under decentralized and centralized decision-making. This paper studies the influence of retailers’ choice of trade credit or bank loan financing strategy on a GSC’s performance and analyzes their decision-making tendency. The results show that manufacturers should provide trade credit and participate in retailers’ financing decisions to avoid double marginal effects under both centralized and decentralized decision-making. Interestingly, the optimal value of green marketing effort and retailer order quantity was twice as high as the decentralized under the centralized decision, indicating that the centralized decision could better improve GSC’s financing efficiency. Especially when the trade credit financing strategy is feasible, this effect is more significant. Finally, the outcomes are verified through numerical simulation, which references GSC practitioners in management decisions.

Adaptive Financing Pattern for Small Scale Fisheries with Case Study of Pajeko Fisheries in Bitung

he agriculture, forestry, and fisheries sectors have a share of 22.05% with 4.21% growth in North Sulawesi. The fisheries sub-sector dominates by 30%. The disbursement of banking institutions' credit for the sector increased by 35% in 2015-2017 but absorbs only 7% of total loans disbursed. The reluctance of formal financial institutions to provide credit to improve small fisheries has increased in non-formal financing. This study identifies factors influencing financing sources choice, comparison of bank and non-bank financing sources, and recommend adaptive financing patterns for small fisheries. Based on descriptive qualitative analysis of in-depth interviews with 32 respondents from 85 Pajeko fishers (mini purse seine) in the Bitung Oceanic Fishing Port (PPS), concluded that 97% of Pajeko fishers in Bitung chose non-bank to finance their operation with determinant factors of financial source: (i) easiness administration (88%), (ii) payment flexibility (78%), and (iii) collateral (69%). The result of comparison simulation shows that boat owner financing with profit sharing for three (boat, boat owner, crews) is the most profitable for the boat owner, while bank loan financing with profit sharing for two (boat owner, crews) is the most profitable for crews. Accordingly, an adaptive financing strategy development is recommended for banking institutions based on influencing factors of fisher’s choices and Pajeko fisher’s characteristics-based approach. Keywords: Pajeko fishery, resource of financing, bank financing source, non-bank financing source, adaptive financing

Does the use of tax haven subsidiaries by U.S. multinational corporations affect the cost of bank loans?

This study examines whether the use of tax haven subsidiaries by U.S. multinational corporations (MNCs) is associated with the cost of bank loans. We find that more intensive tax haven subsidiary use by MNCs is positively associated with the cost of bank loans. In cross-sectional analyses, we identify channels through which the positive association between tax haven intensity and bank loan costs is more pronounced, such as a weak information environment, poor corporate governance, high CEO pay-for-performance and corporation-related wealth, and low managerial ability. We also find that intensive tax haven use is positively (negatively) associated with non-price loan contract terms, such as collateralization and financial covenants (loan maturity and general covenants). Our main result holds when public bonds are substituted for bank loans. Finally, additional analysis shows that MNCs with high levels of tax haven intensity are more likely to rely on bank loan financing than on raising debt from the bond market. Overall, this study adds to an emerging body of literature on corporate taxation and debt policy.

What sources of finance constrain Vietnamese listed firms?

This study is to investigate the sources of finance imposing the constraints on Vietnamese listed firms, after the introduction and rapid growth of the equity markets and the privatization wave that started since 1992. Using accounting data of listed firms on the Vietnamese stock markets, we find that listed firms are financially constrained with respect to both external funding sources, equity and long-term debt finance. Particularly, state-owned firms do exhibit higher sensitivity coefficients of equity than private firms, albeit with a non-statistically significant difference. For bank loan financing, we notice that large (HOSE listed) state-owned firms show a sensitivity that is three times the sensitivity of the private firms. The smaller HNX listed firms, however, show the reverse result, the private firms have a sensitivity coefficient that is twice as large as the one for the state-owned firms.

CEO Turnover, Information Uncertainty, and Debt Contracting

CEO turnovers are important corporate events that can lead to significant changes within the firm. We find that CEO departures are associated with a subsequent increase in bank loan financing. The negative effect that CEO departures have on borrowing costs is largely driven by forced CEO turnovers. Following such departures, firms pay higher loan spreads, see an increase in covenants, and are more likely to be subject to collateral requirements, when compared to matched non-turnover and voluntary turnover firms. Evidence suggests that asset substitution and changes in accounting information quality help to explain the observed worsened terms following forced dismissals. On the other hand, more traditional voluntary departures are unrelated to changes in price and non-price loan terms.

A mutual-aid mechanism for supply chains with capital constraints

ABSTRACTWe consider a supply chain in which both the supplier and the distributor experience capital constraints. Due to the capital constraints, the supplier faces a capital deficit during the production period and the distributor faces a capital deficit during the sales period. Under the bank loan financing, we derive the optimal strategies for both the supplier and the distributor. Then we propose a mutual-aid mechanism under which the distributor provides an advance payment to the supplier during the production period, and the supplier offers a deferred payment trade credit to the distributor during the sales period. As the demand is uncertain, there is a bankruptcy risk with the distributor, which is taken into consideration in our model. We develop a Stackelberg game model and derive the optimal strategies under the mutual-aid mechanism. Our results indicate that the mutual-aid mechanism can improve the profits for both the supplier and the distributor, comparing to the bank loan financing case.

Profit Management as an Instrument for SMEs Developing: the Case for Slovakia

The goal of the business should reflect its efforts to achieve a certain future state. Classical economic theories emphasize the achievement of profit as a fundamental goal of business. Modern theories consider gaining profit as one of the basic motivating factors. In practice, we distinguish several profit categories that are described in our contribution. The effort of businesses is detection of indicators that help enterprises to generate profit. In our contribution, we focused on the analysis of the profitability of small and medium-sized enterprises as well as on the identification of indicators that significantly influence the rate of profit. In our research we worked with a sample of 9,500 Slovak small and medium-sized enterprises. It was primarily a limited liability company with domestic ownership. We mainly focused on this type of businesses because many authors emphasize the irreplaceable role of small and medium-sized enterprises in countries' economies. Small and medium-sized enterprises play a very important role not only in Slovakia but also in the global economy. The significantly influence the creation of hundreds of jobs, regional development or a high percentage of GDP. Approximately 98% of enterprises in the Slovak Republic fall into the category of small and medium-sized enterprises. For their functioning, it is very important to have the capital that they inevitably need, either for the start of business as such, for development. However, these type of businesses does not always have easy access to financing, especially in the case of bank loan financing. Profit for SMEs is a very important internal source of funding. The aim of our paper is profit analysis and identification of the main profit-taking indicators. The analysis of the profitability was conducted by using methods of descriptive statistics. Based on the studied literature, we selected individual profit categories as basic indicators of profitability as well as selected indicators of profitability that are defined below. Pearson's correlation coefficient and the one-way ANOVA were used to examine the relationship between the selected indicators and achieved profit. Graphs and charts are used to clear the processing of the results of our research. Keywords: ANOVA, cash management, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, net operating profit after tax, earnings before interest after taxes, Pearson correlation coefficient.

Bank Loan Financing for Small and Medium Enterprise: Interactive Game Industry Player Perspective

Bank Loan Financing for Small and Medium Enterprise: Interactive Game Industry Player Perspective

Financing strategies for a capital-constrained supplier under yield uncertainty

We consider a supply chain consisting of a supplier and a distributor, in which the supplier has a capital constraint and faces productivity yield uncertainty. To solve the capital constraint problem, we propose an advance payment with risk compensation (APRC) mechanism, under which the distributor finances the supplier with an advance payment, and the supplier provides a price discount to compensate the distributor for the supplier's bankruptcy risk. The optimal solutions are derived under the APRC mechanism and the results indicate that under the APRC, the whole supply chain performs as well as if there is no capital constraint, in terms of profits and optimal strategies. Therefore, the APRC is an efficient solution for the supplier's capital constraint issue. In addition, when the deficit is big, the APRC provides an alternative financing arrangement and it can bring higher profits for both parties. Another very interesting finding is that, when the capital deficit is small, the supplier can do better with the bank loan financing, despite that a higher interest rate needs to be paid in this case.