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Financing strategy analysis for a multi-sided platform with blockchain technology

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  • Yugang Yu
  • Ganquan Huang
  • Xiaolong Guo

Abstract

Thanks to the credibility and transparency of blockchain technology, small and medium enterprises (SMEs) can use self-guarantee to obtain loans from financial institutions. Unlike the well-developed supply chain finance (SCF) using guarantees provided by a core enterprise, the effectiveness of SCF with self-guarantee is unclear, especially in a multi-sided market setting. The current paper explores this effectiveness by building an analytical model involving four kinds of players: a multi-sided platform, a customer, a bank, and multiple transportation service providers. In this setting, a traditional SCF model with Platform Undertakes Guarantee (PUG) and a novel SCF strategy with self-guarantee (i.e. Customer Undertakes Guarantee (CUG)) are analysed. The results indicate that CUG can bring a Pareto improvement for the market compared to PUG. Although CUG displays higher efficiency, it is not always beneficial to the platform when the customer's opportunity cost rate is higher than the platform's. Furthermore, to mitigate credit risk caused by a low-credit customer, the platform may employ a prepayment strategy. Analytical results of this study indicate that the prepayment ratio does not affect the customer's cost, and thus, providing a high prepayment ratio but a relatively low service fee rate to low-credit customers is suggested to the platform.

Suggested Citation

  • Yugang Yu & Ganquan Huang & Xiaolong Guo, 2021. "Financing strategy analysis for a multi-sided platform with blockchain technology," International Journal of Production Research, Taylor & Francis Journals, vol. 59(15), pages 4513-4532, August.
    • Handle: RePEc:taf:tprsxx:v:59:y:2021:i:15:p:4513-4532
    DOI: 10.1080/00207543.2020.1766718
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    Citations

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    Cited by:

    1. Suuronen, Sami & Ukko, Juhani & Saunila, Minna & Rantala, Tero & Rantanen, Hannu, 2024. "The implications of multi-sided platforms in managing digital business ecosystems," Journal of Business Research, Elsevier, vol. 175(C).
    2. Reza-Gharehbagh, Raziyeh & Hafezalkotob, Ashkan & Makui, Ahmad & Sayadi, Mohammad Kazem, 2022. "Financing green technology development and role of digital platforms: Insourcing vs. outsourcing," Technology in Society, Elsevier, vol. 69(C).
    3. Jian Yang & Jichang Dong & Suixiang Gao & Guoqing Wang, 2023. "Blockchain-Based Long-Term Capacity Planning for Semiconductor Supply Chain Manufacturers," Sustainability, MDPI, vol. 15(6), pages 1-20, March.
    4. Choi, Tsan-Ming & Siqin, Tana, 2022. "Blockchain in logistics and production from Blockchain 1.0 to Blockchain 5.0: An intra-inter-organizational framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 160(C).
    5. Xue Wang & Deqing Ma & Jinsong Hu, 2022. "Recycling Model Selection for Electronic Products Considering Platform Power and Blockchain Empowerment," Sustainability, MDPI, vol. 14(10), pages 1-44, May.
    6. Yu Gong & Yun Zhang & Mohammed Alharithi, 2022. "Supply Chain Finance and Blockchain in Operations Management: A Literature Review," Sustainability, MDPI, vol. 14(20), pages 1-21, October.

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