Optimal Financing Schemes for E-Commerce Closed-Loop Supply Chains with Quality Uncertainty: Balancing Profitability and Environmental Impact

The rise of the circular economy and e-commerce has led to the emergence of e-commerce closed-loop supply chains (ECLSC). In practice, investing in process innovation (PI) is key to improving profitability and competitiveness. However, manufacturers at the down-stream of ECLSC often face financial constraints and quality uncertainty of used products, while research on how to select financing strategies under these conditions remains lim-ited. To explore the optimal financing scheme for the ECLSC, this study investigates two financing schemes: bank financing (BF) and FinTech platform financing (FPF), which combines debt financing (DF) and equity financing (EF). Some key findings are derived. For the ECLSC, the FPF scheme is more profitable when the unit manufacturing cost for new components exceeds the threshold or PI costs are relatively low. Additionally, the FPF performs better when consumer sensitivity to recycling prices is high. The BF is more ben-eficial when the FPF scheme's interest rate and DF ratio are relatively high. The FPF ena-bles the ECLSC to achieve maximum profits and minimize environmental impact within a specific range. Furthermore, the financing models are extended to incorporate consider-ations of fairness, in which manufacturing costs primarily influence the optimal financ-ing scheme.