Optimal Financing Strategy in a Green Supply Chain with Capital Constraint and Yield Uncertainty

Green innovation has become the focus of sustainable development and green supply chain transformation.However, the limited capital available and uncertain yield prevent the green supply chain from investing in green technologies.This paper focuses on capital constraint and yield uncertainty, and constructs a green supply chain to investigate the optimal financing strategies of the manufacturer and supplier under the bank credit and trade credit modes.The results show that the green innovation level under the trade credit mode is consistently higher than that under the bank credit mode.However, the optimal financing strategies of the manufacturer and supplier, who are profit-driven, depend on the manufacturer's initial capital and the relationship between the interest rate of bank credit and trade credit.Although the manufacturer's initial capital plays a crucial role in determining the financing strategies of the green supply chain and eases the manufacturer's funding pressure, there exists an upper bound.Interestingly, keeping a low initial capital can increase profits for all firms in the green supply chain, thus leading to a win-win situation under the trade credit mode.