246 / 2024-04-23 20:16:56

Participants` Strategy of Blockchain enabled Factoring under Different scenarios

Blockchain, Supply chain finance, Factoring, Blockchain adoption incentive, Credit risk, Theoretical analysis.

Blockchain-enabled factoring (BF) has experienced significant development in recent years, aiming to address information asymmetry inherent in traditional factoring. However, BF encounters challenges related to adoption barriers and complex adoption scenarios. We explore various adoption configurations among participants (supplier, retailer, and bank), analyzing the game equilibrium among traditional factoring (TF), all participants adopting blockchain (ABF), and scenarios where only the supplier (Supplier's OBF) or retailer and the bank (Retailer's OBF) adopt blockchain. Our focus lies on the financing and operating strategies of each participant, as well as the benefits of blockchain (risk prevention) and its mechanisms (incentives). Our objective is to comprehend, within the context of factoring, how participants can derive benefits from blockchain adoption and what conditions and limitations influence the decision to adopt blockchain. Our findings indicate that blockchain can mitigate information asymmetry and non-verifiable information, encouraging supply chain partners to adopt blockchain vigorously. Additionally, under specific conditions, ABF and Retailer's OBF effectively enhance supply chain production efficiencies, driven by the incentives provided by banks. However, we observe that incentives can negatively impact the supplier's blockchain adoption, revealing limitations in incentivizing the supplier. We further characterize supply chain participants who exhibit a strong demand for blockchain adoption.