Author(s)

Yang Wu

Affiliation(s)

HSBC Bank (China) Limited, Shanghai 200120, China.

Corresponding Author

Yang Wu

ABSTRACT

The emergence of digital platforms in emerging market economies has fundamentally transformed supply chain finance, creating novel opportunities for working capital optimization while introducing distinct credit risk challenges. This paper develops a comprehensive dynamic credit pricing model for supply chain financing arrangements where the buyer assumes financial responsibility and interest payments, termed buyer-paid-interest financing. We integrate game-theoretic equilibrium analysis with credit risk assessment frameworks to characterize optimal pricing mechanisms across heterogeneous supplier credit profiles. Through a two-period modeling framework, we demonstrate that optimal interest rates exhibit non-linear relationships with both probability of default and loss given default parameters. Our analysis reveals that platform-based economies realize superior welfare outcomes compared to traditional bank-intermediated arrangements when credit assessment technologies efficiently capture supplier transaction data. We further establish conditions under which buyer-paid-interest structures dominate alternative financing mechanisms from both platform and supplier perspectives. Numerical analysis demonstrates that optimal pricing policies balance operational coordination benefits against credit risk compensation requirements. The model offers actionable insights for platform operators, financial institutions, and policymakers designing sustainable supply chain financing ecosystems in emerging markets.

KEYWORDS

Supply chain finance; Dynamic pricing; Credit risk modeling; Platform economies; Working capital management; Emerging markets; Buyer-initiated financing

CITE THIS PAPER

Yang Wu. Dynamic credit pricing model for buyer-paid-interest supply chain financing in emerging platform economies. Social Science and Management. 2025, 2(4): 85-96. DOI: https://doi.org/10.61784/ssm3073.

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