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Essays on Supply Chain Finance

dc.contributor.advisorTunca, Tunayen_US
dc.contributor.authorZhu, Weimingen_US
dc.date.accessioned2016-09-08T05:39:10Z
dc.date.available2016-09-08T05:39:10Z
dc.date.issued2016en_US
dc.identifierhttps://doi.org/10.13016/M2XV45
dc.identifier.urihttp://hdl.handle.net/1903/18751
dc.description.abstractI study how a larger party within a supply chain could use its superior knowledge about its partner, who is considered to be financially constrained, to help its partner gain access to cheap finance. In particular, I consider two scenarios: (i) Retailer intermediation in supplier finance and (ii) The Effectiveness of Supplier Buy Back Finance. In the fist chapter, I study how a large buyer could help small suppliers obtain financing for their operations. Especially in developing economies, traditional financing methods can be very costly or unavailable to such suppliers. In order to reduce channel costs, in recent years large buyers started to implement their own financing methods that intermediate between suppliers and financing institutions. In this paper, I analyze the role and efficiency of buyer intermediation in supplier financing. Building a game-theoretical model, I show that buyer intermediated financing can significantly improve supply chain performance. Using data from a large Chinese online retailer and through structural regression estimation based on the theoretical analysis, I demonstrate that buyer intermediation induces lower interest rates and wholesale prices, increases order quantities, and boosts supplier borrowing. The analysis also shows that the retailer systematically overestimates the consumer demand. Based on counterfactual analysis, I predict that the implementation of buyer intermediated financing for the online retailer in 2013 improved channel profits by 18.3%, yielding more than $68M projected savings. In the second chapter, I study a novel buy-back financing scheme employed by large manufacturers in some emerging markets. A large manufacturer can secure financing for its budget-constrained downstream partners by assuming a part of the risk for their inventory by committing to buy back some unsold units. Buy back commitment could help a small downstream party secure a bank loan and further induce a higher order quantity through better allocation of risk in the supply chain. However, such a commitment may undermine the supply chain performance as it imposes extra costs on the supplier incurred by the return of large or costly-to-handle items. I first theoretically analyze the buy-back financing contract employed by a leading Chinese automative manufacturer and some variants of this contracting scheme. In order to measure the effectiveness of buy-back financing contracts, I utilize contract and sales data from the company and structurally estimate the theoretical model. Through counterfactual analysis, I study the efficiency of various buy-back financing schemes and compare them to traditional financing methods. I find that buy-back contract agreements can improve channel efficiency significantly compared to simple contracts with no buy-back, whether the downstream retailer can secure financing on its own or not.en_US
dc.language.isoenen_US
dc.titleEssays on Supply Chain Financeen_US
dc.typeDissertationen_US
dc.contributor.publisherDigital Repository at the University of Marylanden_US
dc.contributor.publisherUniversity of Maryland (College Park, Md.)en_US
dc.contributor.departmentBusiness and Management: Decision & Information Technologiesen_US
dc.subject.pqcontrolledOperations researchen_US
dc.subject.pqcontrolledEconomicsen_US
dc.subject.pquncontrolledContracten_US
dc.subject.pquncontrolledEmpirical operations managementen_US
dc.subject.pquncontrolledOperations Finance Interfaceen_US
dc.subject.pquncontrolledSupply Chainen_US


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