Supply Chain Finance Credit Risk

Abstract

Financing is a cornerstone for the effective operation of supply chains. Lead companies, whether positioned upstream or downstream, hold a unique significance in shaping financing strategies. These strategies are not limited to the acquisition of financial resources but also encompass risk analysis, among which credit risk prominently emerges within the supply chain. The confluence between specific financing of these chains and avant-garde information technologies enhances resource sharing and facilitates the exchange of data, capital, and logistics between banking entities; leading to optimized operational effectiveness and the mitigation of inherent risks. However, this dynamic is not without challenges, particularly the propagation of credit risk, which can reverberate substantial consequences on the financing structure and the integrity of the supply chain. The foray of blockchain technology into the financing of this chain was primarily aimed at alleviating the financial constraints faced by companies. This study seeks to address the vectors influencing financing and the dynamics of credit risk in supply chains, contributing to a better understanding of risk in financial networks and the supply structure. It is concluded that, within the spectrum of considered risks, credit risk stands out as the most impactful on supply chains. Oversight and control of this risk are crucial for the financial sustainability of the chain, and are vital in the risk assessment process and in securing finance for the entire supply chain structure.