Credit Risk Management in Supply Chain Finance for Chinese Commercial Banks

Abstract

Supply chain finance is a financial product provided by commercial banks from the perspective of the entire supply chain, taking the enterprises in the supply chain as a whole, managing the overall "three flows (capital flow, information flow, and physical flow)" around the core enterprises, providing financial services to different nodes in the chain and reducing financing risks. Supply chain finance can broaden financing channels and reduce financing costs for SMEs in the supply chain, and also provide a stable and profitable business area for commercial banks. As China's supply chain finance is in its initial development stage, there is a lack of credit risk assessment and measurement methods for SMEs, and commercial banks are faced with the difficult decision-making process of granting credit and lending. How to manage risk is the focus of commercial banks in the area of supply chain finance business to realize gains and reduce losses. This paper will take supply chain finance and risk management theory as an entry point, introduce supply chain financing models in the context of the current development of supply chain finance in China, and analyze the credit risk issues in the supply chain finance business in China. This paper selects SMEs in the biopharmaceutical industry after Covid-19 in 2020 as the research object. A robust regression using the logistics regression model is used to establish a credit risk model, explore the factors influencing credit risk in supply chain finance and suggest risk control measures for commercial banks.