Risk control mechanisms of third-party guarantee when financing newsvendor

Two risk control mechanisms, namely, cash deposit, and loan limits based on retained profit or maximum expected guarantor profit, are developed for capital-constrained newsvendor financing. Results show that with a large initial capital mortgage asset, the reduces order quantity to avoid bankruptcy risk. Under mechanism gains greater when has low capital. Setting limit is thus an effective newsvendors not only reduce risk, but also increase guarantee profit. Numerical experiments that, compared more beneficial newsvendor, guarantee, bank.