Impact of supply chain finance on the business risk of core enterprises: evidence from China

Abstract

Purpose This study aims to explore the relationship between supply chain financing (SCF) and the business risks of core enterprises, the economic value of SCF for core enterprises and the motivation for core enterprises to participate in SCF. The authors also examine the mediating effects of financing constraints. Design/methodology/approach This study analyzes the panel data of 393 companies listed on the main board of the A-share market in China from 2011 to 2014 using fixed-effect and intermediary-effect models. Findings The development of SCF in core enterprises can significantly reduce business risk by alleviating financing constraints. Research limitations/implications The study sample is from China’s A-share market, which may limit the ability to generalize results. The indicators used to measure SCF primarily consider commercial credit, which may have affected the accuracy of the study. Practical implications This study provides a new basis for core enterprise managers in the manufacturing sector to conduct SCF and control business risks. SCF with small and medium-sized upstream and downstream enterprises can reduce business risks and enhance competitiveness, especially under financing constraints. Originality/value This study focuses on core enterprises, a topic less explored in academia. It examines the impact of SCF on their performance and the mediating role of financing constraints. This study offers a novel perspective on the SCF transmission mechanism of supply chain finance and provides new insights for core enterprises.