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Blockchain-Enabled Utility Optimization for Supply Chain Finance: An Evolutionary Game and Smart Contract Based Approach

Author

Listed:
  • Shenghua Wang

    (School of Management, Guangzhou City University of Technology, Guangzhou 510800, China)

  • Mengjie Zhou

    (School of Computer Science, University of Bristol, Bristol BS8 1QU, UK)

  • Sunan Xiang

    (Department of Computer Science, The University of Chicago, Chicago, IL 60637, USA)

Abstract

In recent years, blockchain technology has attracted substantial interest for its capability to transform supply chain management and finance. This paper employs evolutionary game theory to investigate the application of blockchain in mitigating financial risks within supply chains, taking into account the technology’s maturity and the risk preferences of financial institutions. By modeling interactions among financial institutions, small and medium enterprises (SMEs), and core enterprises within the accounts receivable financing framework, this study evaluates blockchain’s impact on their decision-making and its efficacy in risk reduction. Our findings suggest the transformative potential of blockchain in mitigating financial risks, solving information asymmetry, and enhancing collaboration between financial entities and SMEs. Additionally, we integrate smart contracts into supply chain finance, proposing pragmatic procedures for their deployment in real-world contexts. Via a detailed examination of blockchain’s maturity and financial institutions’ risk preferences, this research demonstrates the primary determinants of strategic decisions in supply chain finance and underscores how blockchain technology fosters system stability using risk mitigation. Our innovative contribution lies in the design of smart contracts for the ARF process, rooted in blockchain’s core attributes of security, transparency, and immutability, thereby ensuring efficient operation and cost reduction in supply chain finance.

Suggested Citation

  • Shenghua Wang & Mengjie Zhou & Sunan Xiang, 2024. "Blockchain-Enabled Utility Optimization for Supply Chain Finance: An Evolutionary Game and Smart Contract Based Approach," Mathematics, MDPI, vol. 12(8), pages 1-19, April.
    • Handle: RePEc:gam:jmathe:v:12:y:2024:i:8:p:1243-:d:1379217
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    References listed on IDEAS

    as
    1. Jonathan Newton, 2018. "Evolutionary Game Theory: A Renaissance," Games, MDPI, vol. 9(2), pages 1-67, May.
    2. Sara Saberi & Mahtab Kouhizadeh & Joseph Sarkis & Lejia Shen, 2019. "Blockchain technology and its relationships to sustainable supply chain management," International Journal of Production Research, Taylor & Francis Journals, vol. 57(7), pages 2117-2135, April.
    3. Jiri Chod & Nikolaos Trichakis & Gerry Tsoukalas & Henry Aspegren & Mark Weber, 2020. "On the Financing Benefits of Supply Chain Transparency and Blockchain Adoption," Management Science, INFORMS, vol. 66(10), pages 4378-4396, October.
    4. Qingfeng Zhu & Rui Zong & Mengqi Xu, 2023. "Three-Party Stochastic Evolutionary Game Analysis of Supply Chain Finance Based on Blockchain Technology," Sustainability, MDPI, vol. 15(4), pages 1-20, February.
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