Abstract: This paper explores the issue of supplier-led supply chain financing decisions in a low-carbon and cross-holding environment. Considering cross-shareholding, this paper studies the supply chain composed of a well-funded supplier and a capital-constrained manufacturer. Three models of non-financing, bank financing, and trade credit financing are constructed respectively. On this basis, the financing models that the manufacturer preferred and the supplier preferred are given. Also, the impacts of the cross-shareholding ratio and consumers environmental awareness on the economic performance and emission-reduction level are discussed. The conclusions are as follows. Trade credit financing can achieve a win-win situation of reducing emissions and easing capital constraints. However, the capital-constrained manufacturer will always choose bank financing for a higher profit, and the manufacturer increasing shareholdings in the supplier enhances its preference for bank financing. The supplier prefers the manufacturer to choose trade credit financing and is always willing to provide trade credits. Under the trade credit financing model, the manufacturer will not gain more decision power even if it has more shareholdings in the supplier. Under the bank financing model, the manufacturer increasing shareholdings in the supplier can narrow the profit gap and alleviate the unfair profit distribution. The supplier increasing shareholdings in the manufacturer will increase the suppliers profit, but will not always increase the manufacturers profit.

Key words: low-carbon supply chain, cross-shareholding, bank financing, trade credit financing, capital constraint