Demand Information Asymmetry and Supply Chain Financing: A Signaling Perspective

Abstract

This study considers a simple automotive supply chain that includes an automobile manufacturer with demand information and financial advantages and a financially constrained automobile lessor. The manufacturer can decide whether to provide financing support to the lessor, as follows: when the manufacturer offers trade credit contracts, this is seller financing, and the lessor does not need to borrow from banks; if the manufacturer only provides wholesale price contracts, then the lessor must rely on bank financing. By constructing a signaling game, we delve into the interactive relationship between the manufacturer’s contract decisions and the lessor’s optimal financing strategies under both symmetric and asymmetric demand information scenarios. The findings show that, under symmetric information, the decisions of the manufacturer and the lessor are primarily driven by demand price sensitivity, with no significant financing conflicts between the two parties. However, under asymmetric information, their decisions are also closely related to the degree of demand fluctuation, leading to the emergence of financing conflicts. The innovation of this study lies in its incorporation of demand information asymmetry into the analytical framework governing manufacturers’ contract decisions and lessors’ financing strategies. This provides valuable theoretical insights and practical guidance for automotive supply chains operating under financial constraints.

Keywords

• supply chain management
• decision analysis
• bank financing
• seller financing
• signaling game