On Credit Risk Contagion of Supply Chain Finance under COVID-19

Abstract

Existing research on credit risk contagion of supply chain finance pays more attention to the influence of network internal structure on the process of risk contagion. The spread of COVID-19 has had a huge impact on the supply chain, with a large number of enterprises experiencing difficulties in operation, resulting in increased credit risks in supply chain finance. Under the impact of the epidemic, this paper explores the transmission speed and steady state of credit risk when the supply chain finance network is affected by external impact so that we can have a more complete understanding of the ability of supply chain finance to resist risks. The simulation results show that external shocks of different degrees will increase the number of initial infected enterprises and lead to the increase in credit risk contagion speed but have no significant impact on network steady state; the speed of credit risk contagion is positively correlated with network complexity but not significantly affected by network size; core enterprises infected will increase the rate of credit risk contagion. The intensity of policy intervention has obvious curative effect on the risk caused by external shock. When the supply chain financial network is affected by external shocks, the intensity, time, and pertinence of policy response can effectively prevent the credit risk contagion.