The adoption of a sales adjustment contract can improve the performance of the supply chain by allowing the seller to adjust unredeemed products thereby reducing the lending risk for the bank Understa

Overall, our study suggests that the adoption of a sales adjustment contract can be beneficial for both the seller and the bank in the context of chattel mortgage financing. It reduces the lending risk for the bank and allows the seller to adjust unredeemed products, thereby improving supply chain performance. However, the impact of competition on the effectiveness of sales adjustment contracts should also be considered. Our results can provide insights for supply chain managers and policymakers on the optimal deployment of contract innovations and the role of competition in improving supply chain performance.