Credit Risk Diffusion in Supply Chain Finance: A Complex Networks Perspective

Zebin Zhao, Dongling Chen, Luqi Wang and Chuqiao Han
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Zebin Zhao: School of Management, Harbin Institute of Technology, Harbin 150001, China
Dongling Chen: School of Management, Harbin Institute of Technology, Harbin 150001, China
Luqi Wang: School of Management, Harbin Institute of Technology, Harbin 150001, China
Chuqiao Han: School of Management, Harbin Institute of Technology, Harbin 150001, China

Sustainability, 2018, vol. 10, issue 12, 1-20

Abstract: The diffusion of credit risk in a supply chain finance network can cause serious consequences. Using the “1 + M + N” complex network model with BA scale-free characteristics, this paper studies the credit risk diffusion in a supply chain finance network, where the credit risk diffusion process is simulated by the SIS epidemic model. We examine the impacts of various key factors, including the general financing ratio, cure time, network structure, and network scale on the credit risk diffusion process. It is found that credit risk diffusion rarely occurs in a network with a low average degree. When the average degree of the network increases, the occurrence of the credit risk diffusion becomes more frequent. Besides, the degree of the initially infected nodes with credit risk does not affect the density of the infected nodes in the steady state, while a higher degree of the cure nodes helps restrain the diffusion of credit risk in the supply chain finance network. Finally, the simulation result based on the supply chain finance network with a core node indicates that the diffusion of the credit risk diffusion in sparse supply chain finance networks with low average degrees is unstable. The results provide better understandings on the credit risk diffusion in supply chain finance networks.

Keywords: supply chain finance; credit risk; complex network; simulation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:12:p:4608-:d:188154

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