Does Fixed-Rate Loans Help Small and Mirco Retailers with Insufficient Operational Capitals?
In the past decade,small and micro enterprises have faced difficulties in financing,whereas private lending is booming.In this study,how different interest rate pricing policy affects retailers'operational decisions is studied.By incorporating bankruptcy risk and its related costs,a newsvendor model is formulated in which a retailer with limited capital can finance its operational capital from a bank at a fixed loan interest rate.The optimal lending and ordering decisions of a bank and a retailer,respectively,are derived,and the optimal deci-sions are compared under the floating interest rate.Our results show that the only decisive factor affecting lend-ing decisions is the value of the collateral.Bankruptcy risk and its related costs have no effect on a bank's lend-ing decision.Moreover,the ordering decision of a retailer is based on its initial operational capital.For giant or mega-retailers who possess heavy assets,the operational decisions are unaffected by how the interest rate is priced.However,for small and micro retailers,the fixed interest rate never alleviates the insufficient operational capital of the retailer.
capital constraintfixed interest ratenewsvendorsmall and micro enterprisescollateral
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维普
