Financing preference and the role of credit insurance in a green supply chain

Abstract

As environmental pollution becomes more serious, green supply chain management has gradually become a research hotspot. However, the fact is often ignored that many companies are small‐ and medium‐sized enterprises. They do not have enough capital to make green decisions. This paper studies a green supply chain financing system, including a green manufacturer and a capital‐constrained retailer and analyzes the effect of credit insurance on financing and product's green level. We consider consumers have a green preference. The retailer can finance through two methods: bank credit financing and trade credit financing. We find the manufacturer's financing preference is closely related to unit production cost and green investment cost coefficient. When the unit production cost is low, and the green investment cost coefficient is high, or the unit production cost is high, and the green investment cost coefficient is in the middle threshold, the manufacturer prefers to actively provide trade credit financing for the capital‐constrained retailer. And, in the former case, trade credit financing can also enhance the green level of the supply chain. Finally, we also find that credit insurance can mitigate the default risk of the retailer and help the manufacturer improve profits but cannot improve the product's green level.

Does green credit financing mode with cap‐and‐trade scheme really benefit all members?

“…Initially, the newsvendor model was extended by introducing financial concerns, which makes the basis of the analytical framework of the SCF (Dada & Hu, 2008; Yan et al, 2020). Under this paradigm, a growing number of articles consider the demand uncertainty and optimal output decisions to study the SCF issues and compare differences between various financing models such as BCF and trade credit financing (TCF) (Li et al, 2022). At the outset, some scholars believed that BCF is a more attractive financing mode than TCF due to the fact that the wholesale price under TCF is generally higher; even though the trade credit has a lower interest rate, the retail will still choose the BCF mode (Jing et al, 2012).…”

Operational and financing decisions of a contract manufacturer under remanufacturing authorization strategy

“…With the advancement of technology and industrialization, remanufactured products are becoming popular because the faster upgrading of products brings problems of resource consumption and environmental pollution (Li et al, 2022;Nasiri & Shokouhyar, 2021). In the last 10 years, the remanufacturing market has attracted many contract manufacturers (CMs) to adopt remanufacturing as their core business due to its potential, market size, and environmental benefits (Atasu & Souza, 2013;Giutini & Gaudette, 2003;Saxena et al, 2020;Tang et al, 2022).…”