Comparative Analysis of Financial Cost in the Iranian Steel Chain: Comparing SCF Financing with Other Working Capital Financing Methods

Document Type : Original Article

Authors

1 Shahid Beheshti University

2 Department of Economics, Faculty of Economics and Political Sciences, Shahid Beheshti University

3 Faculty of Economics and Political Science, Shahid Beheshti University

10.48308/jem.2026.243398.2042

Abstract

Working capital financing is a major challenge for Iran’s steel industry, particularly under credit tightness caused by contractionary monetary policies. This study compares the effective real cost of alternative working capital financing methods within the Iranian steel supply chain and evaluates Supply Chain Finance (SCF) instruments against conventional money market and debt-based capital market tools. The research is applied and exploratory, employing a mixed qualitative–quantitative approach. In the qualitative phase, a three-tier supply chain financing structure was identified through systematic content analysis and expert interviews. In the quantitative phase, explicit and implicit costs of financing instruments were estimated using transaction cost theory and a comparative analytical framework. The results indicate that money market and capital market debt instruments impose high effective real costs due to institutional frictions, discounting constraints, and resource lock-in. By contrast, SCF instruments including )GAM bonds(, prove to be the most efficient working capital financing options under contractionary monetary conditions, owing to their operational discountability and credit transfer along the supply chain.

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