{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,5,3]],"date-time":"2026-05-03T03:06:37Z","timestamp":1777777597480,"version":"3.51.4"},"reference-count":19,"publisher":"Emerald","issue":"1-2","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"published-print":{"date-parts":[[2020,10,1]]},"abstract":"<jats:p>We study the financial and operational decisions of two capital-constrained firms via a limited joint liability (LJL) financing scheme offered by a bank. We construct a two-stage game model in which the firms separately determine their individual ordering decisions according to the prior joint liability agreement between the firms and the bank. Applying non-cooperative game theory to analyze the decision-making problems of the two firms, we establish the existence of equilibrium decisions for the two firms.We derive mild conditions under which the LJL financing scheme is simultaneously preferred by the two firms. We show that the two firms\u2019 strategies are complementary and the firms\u2019 equilibrium order quantities are always positively influenced by the risk-sharing term. We find that a greater bank loan leverage ratio may not simultaneously improve the two firms\u2019 performance. When the credit line and interest rate are endogenized by the bank, we provide insights on the relationship between the optimal interest rate and bank loan leverage ratio through risk hedging.<\/jats:p>","DOI":"10.1561\/0200000096-3","type":"journal-article","created":{"date-parts":[[2020,10,1]],"date-time":"2020-10-01T07:31:08Z","timestamp":1601537468000},"page":"55-70","source":"Crossref","is-referenced-by-count":0,"title":["Inventory and Financial Strategies with Capital Constraints and Limited Joint Liability"],"prefix":"10.1108","volume":"14","author":[{"given":"Bin","family":"Cao","sequence":"first","affiliation":[{"name":"School of Business Administration, South China University of Technology ,","place":["China"]}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Xin","family":"Chen","sequence":"additional","affiliation":[{"name":"Department of Industrial Enterprise and Systems Engineering, University of Illinois at Urbana-Champaign ,","place":["USA"]}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"T. 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Edwin","family":"Cheng","sequence":"additional","affiliation":[{"name":"Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University ,","place":["Hong Kong"]}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Yuan-Guang","family":"Zhong","sequence":"additional","affiliation":[{"name":"School of Business Administration, South China University of Technology ,","place":["China"]}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Yong-Wu","family":"Zhou","sequence":"additional","affiliation":[{"name":"School of Business Administration, South China University of Technology ,","place":["China"]}],"role":[{"role":"author","vocabulary":"crossref"}]}],"member":"140","published-online":{"date-parts":[[2020,10,1]]},"reference":[{"issue":"2","key":"2026042213123578500_ref001","doi-asserted-by":"crossref","first-page":"348","DOI":"10.1016\/j.jdeveco.2009.06.004","article-title":"Group lending and individual lending with strategic default","volume":"91","author":"Bhole","year":"2010","journal-title":"Journal of Development Economics"},{"issue":"9","key":"2026042213123578500_ref002","doi-asserted-by":"crossref","first-page":"1274","DOI":"10.1287\/mnsc.1040.0278","article-title":"Inventory management with asset-based financing","volume":"24","author":"Buzacott","year":"2004","journal-title":"Management Science"},{"issue":"10","key":"2026042213123578500_ref003","doi-asserted-by":"crossref","first-page":"3207","DOI":"10.1287\/mnsc.2016.2515","article-title":"Inventory, risk shifting, and trade credit","volume":"63","author":"Chod","year":"2017","journal-title":"Management Science"},{"issue":"2","key":"2026042213123578500_ref004","doi-asserted-by":"crossref","first-page":"415","DOI":"10.1016\/j.jdeveco.2004.05.005","article-title":"Group-lending: Sequential financing, lender monitoring and joint liability","volume":"77","author":"Chowdhury","year":"2005","journal-title":"Journal of Development Economics"},{"issue":"5","key":"2026042213123578500_ref005","doi-asserted-by":"crossref","first-page":"569","DOI":"10.1016\/j.orl.2008.06.004","article-title":"Financing newsvendor inventory","volume":"36","author":"Dada","year":"2008","journal-title":"Operations Research Letters"},{"issue":"1","key":"2026042213123578500_ref006","doi-asserted-by":"crossref","first-page":"53","DOI":"10.1287\/msom.2017.0677","article-title":"Financing multiple heterogeneous suppliers in assembly systems: Buyer finance vs. bank finance","volume":"20","author":"Deng","year":"2018","journal-title":"Manufacturing & Service Operations Management"},{"key":"2026042213123578500_ref007","doi-asserted-by":"crossref","unstructured":"Dong, L., L.Ren, and D.Zhang (2019). \u201cFinancing small and medium-size enterprises via retail platforms\u201d. 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