Financing format selection for electronic business platforms with a capital-constrained e-tailer

Cheng Ma, Yuankang Dai and Zhongfei Li

Transportation Research Part E: Logistics and Transportation Review, 2022, vol. 162, issue C

Abstract: In today’s new stage of digitization, the rapid development of FinTech enables an increasing number of electronic business (EB) platforms to have access to providing financing services to capital-constrained e-tailers. This paper studies the EB-platform’s financing format preference for self-supported loan financing, assisted loan financing, and joint loan financing and investigates the multifaceted impacts of loan programs on the order quantity of e-tailer, the operational decisions of the EB-platform, as well as the whole supply chain performance. A multi-period game-theoretic model made up of one capital-constrained e-tailer (the follower), one bank (the sub-leader) and one EB-platform (the leader) is established wherein the EB-platform has a financing format option, and the bank determines the competitive interest rate. The analytical results indicate that if the opportunity cost of the EB-platform is greater than the one for the bank, then the EB-platform prefers to adopt either an assisted loan or a joint loan, rather than a self-supported loan for the e-tailer. Otherwise, the EB-platform provides the e-tailer with a self-supported loan or assisted loan. In particular, given the e-tailer’s relatively high procurement cost, the EB-platform may adopt an assisted loan mode. We also find that the appropriate financing format selection for the whole supply chain depends heavily on the interaction of the commission fee and the procurement cost. Further, a counter-intuitive finding is that under the assisted loan format, the EB-platform will also charge the bank a negative service fee when the unit commission fee is relatively high. In contrast, under the joint loan format, the EB-platform should not charge the service fee.

Keywords: Operation-finance interface; Platform financing; Opportunity cost; Platform operations; Default risk (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (14)

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DOI: 10.1016/j.tre.2022.102720

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