CSH Talk by Yaniv Proselkov “Measuring the impact of credit availability on supply ecosystem growth”

Yaniv Proselkov (IFM University of Oxford) will present a talk on Friday, April 14, 2023 at 3:30 PM at the Salon.

If you would like to attend the talk, please send us an email at office@csh.ac.at.

Title: “Measuring the impact of credit availability on supply ecosystem growth”

Abstract:

Many countries are underbanked, such that business have no access to non-predatory lending during cashflow shocks. This can lead to unfinished projects and businesses focusing on survival rather can improvement. It can emerge then a country’s supply ecosystem remains small and inefficient, where system level outputs are limited by a lack of available credit. We call these debit economies, in contrast to credit economies with access to financing.

We hypothesise that, because of stronger bullwhips and inability to handle resultant financial ripple effects, debit economy growth is limited by significantly shorter system survival times than credit economies. Through mapping production output rates to classic measures of economic health, such as GDP, we quantify the impact being a debit economy has on a region’s growth.

Using simulation modelling on an empirically derived large scale supply ecosystem, we simulate cash constrained transactions over a firm-to-firm network. Payment delays after delivery vary according to the relative bargaining power between firms, which also determines access to financing in credit economies. Assuming power is linked to criticality, we estimate it using limited scale, egocentric centrality measures estimating criticality, building on nexus supplier theory and community structure assumptions. Growth occurs at firm level as a random reduction of lead time, and only when firms have cash.