The role of cross-shareholding in the green supply chain: Green contribution, power structure and coordination

Research output: Contribution to journalArticle (Academic Journal)peer-review

Abstract

In the inventory financing business, an optimal impawn rate
(loan-to-value ratio) can help the inventory financing providers (IFPs,
she) maintain competitiveness in the inventory financing market. However,
the literature has been silent on how IFPs can optimise the business
through the optimisation of the impawn rate. This study examines the role
of the optimal impawn rate in the inventory financing business. The key
to setting the optimal impawn rate is first evaluating default
probability and then incorporating this into the profit function. We use
a data-driven approach to explore the copula model in setting the optimal
impawn rate. Through numerical analysis, we find that the Clayton
canonical vine copula has a better performance for the prediction of
default probability than the multivariate normal distribution (MVN) and
can thus be used to evaluate default probability. In addition, we uncover
that setting multiple impawn rates for different collaterals allows
inventory financing to yield a higher profit. Further, although the
interest rate, industrial impawn rate, and optimal impawn rate have
strong effects on inventory financing profit, interestingly, the
relationship between them is marginally diminishing.
Original languageEnglish
JournalInternational Journal of Production Economics
Publication statusAccepted/In press - 2021

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