Evolutionary game analysis of rent seeking in inventory financing based on blockchain technology

Abstract

This study constructs a tripartite evolutionary game model composed of a small and medium‐sized enterprise (SME), a supervisory enterprise, and a bank for the inventory financing model. The effects of blockchain technology on rent seeking in supply chain finance are calculated with focuses on its mechanism and advantages in inventory financing from the theoretical perspective. The influence of the parameters on the evolutions is likewise determined. Results show that for high‐value financing business, compared with the traditional model, the bank's application of blockchain can accelerate the system to the stable state, in which the SME complies with the contract, the supervisor does not seek collusion, and the bank thoroughly investigates the relationships of enterprises, and the enhancement of blockchain's automatic monitoring capability does not lead to the bank's inaction on regulation. For low‐value financing business, in response to the problem of collusion between the SME and the supervisor for additional benefits in the traditional model, the bank can monitor fund transfers within enterprises and unauthorized pledge release through smart contracts embedded in the blockchain system to automatically detect joint defaults, and effectively avoid the negative stable state of the bank indulging in inter‐enterprise relations which triggers collusion to embezzle financing. In addition, the bank can enhance the robustness of inventory financing service and curb rent‐seeking behavior in the blockchain inventory financing through strict penalties on the supervisor for its violations, monitoring abnormal capital flows of the SME, confirming appropriate credit rate gap, and moderately raising the service value threshold.

How to promote the digital business model innovation of high‐tech SMEs through government venture capital? An evolutionary game perspective

“…In a related study, game theory models can be employed to analyze the government's decisions regarding eco-innovation behavior (Bimonte et al, 2022;Fu et al, 2023;Sun et al, 2023). Adopting an evolutionary game theory perspective, we can further investigate the coevolution of stakeholder strategies within a system, explore evolutionary trajectories and system stability conditions through numerical simulations, and analyze the policy implications of government behavior (Dong et al, 2022;Hao et al, 2022;Li, 2022;Li et al, 2023;Wu et al, 2020;Zhang & Kong, 2022).…”

“…Following the research findings of Lyapunov, if all eigenvalues of the Jacobi matrix are non-positive at the equilibrium point, that point is considered an ESS for the system (Hao et al, 2022;Li et al, 2023;Lyapunov, 1992;Ritzberger & Weibull, 1995). ESS points under information asymmetry must be pure strategy Nash equilibrium points (Friedman, 1991;Selten & Selten, 1988).…”

Blockchain and Supply-Chain Financing: An Evolutionary Game Approach with Guarantee Considerations

“…In the context of SCF, evolutionary game models have been particularly insightful in analyzing the strategic decisions of financial institutions, core enterprises, and SMEs. Evolutionary game theory can effectively capture the essence of SCF [32,33], where the default behavior of SMEs and the credit endorsement from CEs are critical factors influencing financing outcomes. Studies such as [34,35] have utilized evolutionary game theory to explore financing strategies within supply chains, highlighting the impact of capital constraints and loss avoidance on operational decisions.…”

Exploring Blockchain Research in Supply Chain Management: A Latent Dirichlet Allocation-Driven Systematic Review

“…Related to Topic 3, Li et al [91] underscore the salient advantages of blockchain in inventory financing, especially for high-value financing businesses. It portrays the blockchain's ability to stabilize financing systems by discouraging collusion and promoting compliance among small and medium-sized enterprises (SMEs), supervisory entities, and banks.…”