Online peer-to-peer lending platform and supply chain finance decisions and strategies

Ata Allah Taleizadeh, Aria Zaker Safaei, Arijit Bhattacharya, Alireza Amjadian

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Abstract

Online peer-to-peer (P2P) lending platform is an emerging FinTech business model that establishes a link between investors and recipients of capital in supply chains (SCs). Businesses face capital constraints impacting directly on their final product price and demand. This article studies optimal decisions and operational strategies in a logistics network considering two capital-constrained manufacturers who produce products of different qualities and sell them to a retailer having deterministic demand over a specific period. The high quality product manufacturer borrows capital through an online P2P lending platform with a service fee, while the low quality product manufacturer pre-sells products for competing with the high quality product manufacturer. In this study, we find optimal prices of the SC participants, service rate of the online P2P platform and percentage of the pre-ordering quantity of the retailer. We analyse optimal Stackelberg and Nash equilibrium of the SC participants. We find that an increase in the amount of opportunity cost will cause a decrease in the pre-ordering quantity of the retailer affecting the SC profit in numerous ways. The online P2P lending platform should consider the amount of the retailer’s target profit in determining the platform’s service rate. We posit some practical insights based on our numerical study and observations for SC managers enabling them to take appropriate measures about their optimal strategies according to the networks’ existing economic conditions.
Original languageEnglish
Pages (from-to)1-31
Number of pages31
JournalAnnals of Operations Research
Early online date23 Mar 2022
DOIs
Publication statusE-pub ahead of print - 23 Mar 2022

Keywords

  • Capital constrained manufacturers
  • Online peer-to-peer lending platform
  • Pre-selling
  • Optimal decisions
  • Stackelberg game
  • Nash equilibrium

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