Abstract:

Small and medium-sized retailers are the main force of national economic and social development， but they often face the problem of capital shortage in their production and operation processes. Small and medium-sized retailers mainly obtain loans from financial institutions such as banks to solve their capital shortage problems. After evaluating the credit and repayment ability of small and medium-sized retailers， banks provide funds within the credit line for small and medium-sized retailers in need. Based on these， the impact of bank credit constraints and retailer risk aversion characteristics is considered， and Conditional value-at-risk （CVaR） is used to characterize the risk aversion features of retailers. Three models are constructed： the newsboy model without funding constraints， the full credit exposure model provided by banks， and the newsboy model with credit constraints. The impact of bank credit line and retailer risk aversion characteristics on joint decision-making for retailer ordering and loan procurement is explored.The main results suggest that （i） Providing loans to the retailer can share some market uncertainty risks and stimulate the retailer to increase product orders， mitigating the negative impact of retailer risk aversion characteristics. Specifically， when the degree of risk aversion of the retailer is high， their optimal ordering quantity is higher than the optimal ordering quantity without funding constraints. （ii） A risk-neutral retailer only applies for gap funding loans from banks， while a risk-averse retailer may apply for high-value loans to transfer bankruptcy risks to banks in order to obtain more stable returns. （iii） A risk-neutral retailer will not over-borrow， and their optimal ordering decisions will be determined by market factors and credit line. For a risk-averse retailer， when the bank's credit line is high， they may choose credit line loans and the optimal ordering quantity is consistent with that without funding constraints. It should be noted that when the bank endogenously determines the credit line， the above research conclusions can still be obtained. Moreover， the numerical analysis indicate that although increasing market uncertainty may reduce the utility of the retailer， it does not necessarily lead to a decrease in their ordering quantity. In addition， when banks provide lower credit line and the retailer have a higher degree of risk aversion， the impact of market uncertainty on the optimal ordering quantity of the retailer is more significant， which will also significantly affect their utility. In other words， market demand uncertainty will amplify the impact of bank credit line and retailer risk aversion characteristics on the decision-making of retailer ordering and loan amounts.The management implications are as follows. First， retailers need to develop reasonable financing and ordering strategies based on their own risk aversion characteristics and market demand uncertainty. With the support of a certain credit line provided by banks， retailers can adjust their ordering decisions to achieve the optimal ordering quantity. Second， banks should flexibly adjust credit line based on factors such as retailer risk aversion characteristics and market demand uncertainty to meet retailers’ funding needs. At the same time， banks need to consider risk control to avoid losses caused by retailers’ inability to repay loans.

Key words: retailer financing, credit line, newsboy model, CVaR