Credit guarantee types for financing retailers through online peer-to-peer lending: Equilibrium and coordinating strategy

Abstract This study investigates the role of a credit guarantee company and a peer-to-peer (P2P) lending platform in the financing business of a capital-constrained retailer who faces uncertain demand over a single period. The credit guarantee company is divided into two types: conservative and adventurous. The conservative credit guarantee company aims to earn a certain expected return by setting its guarantee service fee rate, whereas the adventurous one sets the guarantee service fee rate to maximize its profit while ignoring the expected return. In a decentralized financing system, the guarantee types will influence all local optimal decision variables in Stackelberg equilibrium, and the optimal order quantity setting under the adventurous credit guarantee type is more flexible than that under the conservative one. We then analyze the centralized financing system and prerequisites for participation to obtain the supply chain financing (SCF) coordinating strategy. Under the adventurous credit guarantee, the P2P lending platform financing system can achieve SCF coordination, but under the conservative credit guarantee, SCF coordination cannot be achieved. When a credit guarantee company is adventurous and the coordination condition on order quantity is satisfied, the information service fee rate linearly decreases in the guarantee service fee rate, and the P2P lending platform’s and the credit guarantee company’s expected profits have different monotonic properties with the information service fee rate (or the guarantee service fee rate) increasing. Finally, we identify the boundary of the retailer’s initial working capital and the suitable ranges of the service fee rates to achieve SCF coordination.