Supply chain finance risk management

Yenming J Chen, Henry Tsai and Yi-Fen Liu
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Yenming J Chen: National Kaohsiung First University of Science and Technology, Taiwan
Henry Tsai: The Hong Kong Polytechnic University, Hong Kong
Yi-Fen Liu: National Kaohsiung First University of Science and Technology, Taiwan

Tourism Economics, 2018, vol. 24, issue 5, 593-614

Abstract: Based on mechanism design theory on asymmetric information, this study devises a selectable menu of contracts with price discounts and trade credit rates and proposes strategies for mitigating the risk of payment default when a tourism service provider trades with unfamiliar tour operators. Tourism service providers are suggested to remain conservative under a positive economic condition and progressive under a moderate economic condition when engaging in a new business opportunity. However, a fringe level of progressivism may be maintained under a moderate economy and a low-risk environment. The net benefit of tourism service providers increases when the bank rate is high, and the profit of the entire tourism channel increases when the percentage or ability to pay reliable agents is high.

Keywords: contract design; default risk; information asymmetry; tourism distribution channel; tourism service provider; trade credit (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:24:y:2018:i:5:p:593-614

DOI: 10.1177/1354816618762187

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