Supply Chain Finance Research Articles

Economic policy uncertainty and firm green commitment

As coercive regulatory control amplifies, environmental responsibility is one of the most important dimensions in stakeholder demands for corporate social responsibilities. This study interprets green commitments as the approach adopted by firms to seek environmental legitimacy and stakeholder recognition in situations of high environmental uncertainty in the external environment. Then, this study delves into the effects of economic policy uncertainty (EPU) on firm-level green commitment using data of 1914 firms in the A-share market. Specifically, the evidence illustrates that: (1) EPU has a significant positive effect on firm green commitment; (2) R&D investment has a partial intermediary effect between EPU and firm-level green commitments; (3) EPU has a stronger impact on green commitments for non-SOE, manufacturing, and non-heavily polluting firms than others; and (4) positive commitments under uncertainties can improve firm resilience in swaths of economic output, supply chain financing, and debt accessibility.

Nexus of Financing Constraints and Supply Chain Finance: Evidence from Listed SMEs in China

As opposed to developed markets, financing constraints are a more pressing issue among Small and Medium-Sized Enterprises (SMEs) in emerging markets. We explore the severity of financing constraints on SMEs, and examine the role of supply chain finance (SCF) in alleviating those constraints, with the focus on a large emerging market: China. Using the panel data of SMEs listed on Shenzhen Stock Exchange from 2014 to 2020, we employ robust estimations of panel-corrected standard errors (PCSEs) and robust fixed-effects methods to analyze the issue. Our cash–cash-flow sensitivity model points out that listed SMEs in China show significant cash–cash-flow sensitivity, and financing constraints are prevalent. We document that the development of SCF has a mitigation effect on the financing constraints on the SMEs. Our robustness test with Yohai’s MM-estimator is also supportive of the main finding. Our study indicates the importance of supply chain finance development in alleviating the financing constraints on SMEs and, subsequently, supporting their sustainability journey. Overall, our findings have important policy implications for the stakeholders involved in emerging markets, and there are lessons to be learned from the Chinese experience. There is still much to be explored in the nexus of SCF and the financing difficulties of SMEs in China at present, with much of the extant literature concentrating only on specific financing mechanisms. Thus, our study fills the gap by providing a broad and comprehensive analysis of the issue.

Dynamic Evolutionary Game Approach for Blockchain-Driven Incentive and Restraint Mechanism in Supply Chain Financing

The sustainability of financing is an important measure in the development of supply chains. However, the difficulty and high cost of financing have always been critical factors hindering the sustainable development of small and medium-sized enterprises (SMEs). Blockchain technology (BT) is an effective tool to relieve the current problem. Based on it, this study aims to establish Blockchain-driven incentives and restraint mechanisms for SME financing using a dynamic game model in which financial institutions (FIs) and new agricultural business entities (NABEs) are regarded as game subjects. By analyzing the impact of key parameters on the equilibrium state of the game for all stakeholders, several findings are drawn as follows. (1) The usage of BT affects FI loan strategies by influencing their cost in supply chain financing. (2) The usage of BT affects NABE’s strategy choice by influencing their loan interest rate. (3) The usage of BT affects NABE’s strategy choice by influencing their default losses. (4) The usage of BT affects NABE’s and FI’s strategy choices by influencing their additional benefits. This study provides decision-making support for optimal strategy decisions under different conditions and serves as a theoretical reference for the government in formulating financing incentive and restraint mechanisms.

Channel selection and pricing strategy with supply chain finance and blockchain

Some emerge technologies (e.g., blockchain) and new business models (e.g., e-commerce platform) are utilized to promote the digitalization of supply chains. In this paper, we study the channel selection (direct channel/e-commerce platform) and pricing (wholesale pricing/agency pricing) strategies for a capital constrained supplier in the digital supply chain with the consideration of supply chain finance and blockchain. The supplier can sell through the direct channel or the e-commerce platform. When selling through the e-commerce platform, it can choose agency pricing or wholesale pricing mode, as well as whether to obtain financial supports through supply chain finance with blockchain technology. We show that the application of supply chain finance is not always beneficial for the supplier. The initial capital of the supplier plays an important role in channel selection. Besides, the adoption of blockchain technology can promote the development of supply chain finance. Regardless of wholesale pricing or agency pricing, the adoption of blockchain technology is always beneficial to suppliers. However, for the e-commerce platform, the adoption of blockchain technology can bring an increase in the interest and increase the profits of the e-commerce platform, only when the initial capital of the supplier is relatively low.

Financing strategy of the capital-constrained supply chain under uncertainty: the impact of blockchain technology on the credit period

PurposeThis paper explores the effectiveness of using blockchain technology to solve financial constraints faced by small- and medium-sized suppliers in a capital-constrained supply chain.Design/methodology/approachTo characterize the impact of blockchain on credit period and enterprise credit level, the study formulates a newsvendor model to analyze a supply chain in which a financially constrained supplier sells products to a financially sound manufacturer, subject to uncertain demand. The study investigates three repayment methods: the benchmark case without blockchain and two blockchain-enabled cases with the hybrid repayment mode and single repayment mode (SRM), respectively. The study derives and compares the equilibria under each repayment method to characterize their impact.FindingsWhen the bank interest rate is low and the carbon cap is also low, choosing to implement blockchain technology leads to higher profitability for the manufacturer than not utilizing it. Within the framework of blockchain technology, when comparing the two repayment models, the manufacturer exhibits a preference for SRM. Furthermore, under specific conditions of the bank interest rate, blockchain technology can effectively facilitate consensus among supply chain members in terms of channel selection.Practical implicationsThe results derived in this paper provide novel managerial implications to the capital-constrained members in terms of pricing decisions and order quantity under demand uncertainty considering blockchain technology, which transfers the creditor's rights to the bank and shortens the collection time. In addition, blockchain technology enables efficient and intelligent collaborative development of supply chains, which can reduce carbon emissions during the transportation of goods.Originality/valueFew studies incorporate blockchain technology into supply chain finance, and this paper considers the credit period and capital's time value for a capital-constrained supplier facing the adoption of blockchain technology within a stochastic demand environment.

Retracted: Research on the Intelligent Development of Rural Financial Supply Chain under the Background of Internet of Things

Retracted: Research on the Intelligent Development of Rural Financial Supply Chain under the Background of Internet of Things

Trade credit or credit insurance? A green supply chain finance design scheme with multi-objective programming

Classical supply chain finance (SCF) primarily focuses on the financial service among all upstream and downstream supply chain participants. Due to the continuously deteriorating of the ecological environment, an environmental-friendly SCF system is urgently needed. In this paper, we propose a novel SCF design scheme with environmental concerns, i.e., green supply chain finance (GSCF), consider the financing channels both from banks and from consumers, and design a bi-objective optimization model that depicts the trade-off between the benefit and the emission. Further, an improved normalized normal constraint (INNC) Pareto method is developed to address the optimal financing strategy of the bi-objective model. We then conduct a numerical case of a Taiwanese steel firm to verify the effectiveness and efficiency of our method. Results show that our model provides a portfolio of optimal solutions on Pareto frontier which can be applied as an effective decision support system when designing a GSCF. Furthermore, the sensitivity analysis also presents the impact of environmental investment cost, technological ratio of companies and the interest rate of trade credit on the optimal configuration of the GSCF.

Blockchain-Enabled Supply Chain Internal and External Finance Model

This study applies Stackelberg game theory to analyze and compare optimal operational strategies in four supply chain finance scenarios: traditional trade financing (TI), trade financing through the blockchain platform (BI), traditional external financing (TE), and external financing through the blockchain platform (BE). The main findings are as follows: First, the adoption of the blockchain platform reduces the interest rate threshold, making external financing more advantageous for retailers with higher capital constraint. Further, financing through the blockchain platform leads to higher wholesale prices, retail prices, and order quantities compared to traditional financing scenarios. Second, internal trade financing and the use of blockchain technology are preferred over external bank financing. However, conducting external bank financing through the blockchain platform yields greater profit growth for manufacturers and retailers. Accessing the blockchain platform is the optimal strategy for retailers and banks, leading to a favorable “multi-win” situation when the manufacturer’s platform fees are reasonable. Third, the manufacturer’s risk guarantee ratio plays a crucial role in determining the choice of financing mode, particularly when the retailer faces the risk of debt default. This study contributes to the literature by quantifying the impacts of blockchain technology deployment for three aspects that have been overlooked in previous studies: the set-up cost and access fee of the blockchain platform, the service level provided by the platform, and the demand increase resulting from blockchain technology adoption.

Study On Risk Identification of Corporate Supply Chain Finance Based on ISM-MICMAC Model

It is crucial to accurately identify the main influencing factors of supply chain finance risk, analyze their mechanism of action and construct a system of influencing factors for risk management of supply chain finance. This paper examines the three parties involved in supply chain finance, including the financial institution, the core enterprise, and the SMEs, and screens out 21 major risk factors from them. This study calculates the adjacency matrix and accessibility matrix by using SPSSPRO, then constructs the interpretative structural modeling method (ISM) and the recursive structure diagram. Combining the Matrix-based Multiplication Applied to a Classification (MICMAC), this paper classifies the influencing factors into four categories: autonomous category, dependent category, linkages category, and independent category. The results show that: (1) the factors that constitute the deepest level of risk in supply chain finance are crediting false trade, non-standard bill of lading, data information security risk, imperfection of business process design, et cetera. (2) Among all factors, three factors are identified as the autonomous category, nine as the independent category, and nine as the dependent category with no linkages category.

Proposing a Model for Sustainable Development of Creative Industries Based on Digital Transformation

This research aimed to develop a comprehensive model for the sustainable development of creative industries in Iran through digital transformation and interpretive structural modeling. Semi-structured interviews were conducted with 19 experts to extract the dimensions and components of sustainable development. The validated components were presented using a structural equation modeling questionnaire to obtain a comprehensive model. These components were identified and confirmed: sustainable competitive development, consolidation and freeze, sustainable development drivers, digital technology cultural taste, structural social capital, environmental and industrial intelligence, digital work environment, creativity and innovation, financial supply chain management, and digital entrepreneurial ecosystem. The experts validated these components through the research process. It is essential to focus on developing digital infrastructure to achieve sustainable development in creative industries based on digital transformation. It includes digital communications, necessary technologies, and information security, which serve as the foundation to promote creative industries in the digital sphere.

The Risks and Countermeasures of Supply Chain Financing on E-Commerce Platforms

With the popularization of the Internet, e-commerce business has developed rapidly in recent years, and the scale of online transactions is growing day by day. In order to meet the funding needs of enterprises on the platform supply chain and assist the platform's development, e-commerce platform supply chain financing has become one of the important financing methods. But this model will inevitably face more dimensional risks, which will have an impact on financing efficiency. In order to minimize risks and ensure the smooth and efficient development of this model, this article explores the supply chain financing model of e-commerce platforms, and explores and summarizes the existing risks of e-commerce supply chain financing from multiple perspectives. And propose preventive measures from multiple dimensions to address risks. In order to provide reference for improving the supply chain financing of e-commerce platforms, provide more assistance for enterprise financing, and provide certain reference and inspiration for enterprises interested in developing such businesses.

Circular economy practices in supply chain finance: a state-of-the-art review

PurposeSupply chain finance is an emergent research area dealing with the financial performance of a firm throughout its supply chain. It has been drawing significant attention among industrial practitioners and researchers. However, there is need to identify improvements in supply chain finance (SCF) practices to ensure sustainable growth. In recent years, circular economy practices are being adopted worldwide with a motivation to achieve the 17 Sustainable Development Goals (SDGs). Moreover, integration of circular economy practices in the financial aspects of supply chain is still in infant age.Design/methodology/approachAdoption of circular SCF in firms enhances both restorative and regenerative capacities of the firm. In this regard, this study aims to review articles on circular practices in SCF. The study identified 329 articles related to circular practices and sustainable practices in SCF from the Scopus database. The shortlisted articles were reviewed and discussed.FindingsThe findings of the study help to recognize the most influential and productive research in circular SCF in terms of journals and trends. Further research is recommended to explore this area in depth to recognize potential integrating factors that help in smooth acceptance of circular finance in supply chains.Originality/valueBibliometric and network analyses were performed to identify research trends and networks in the field of circular SCF. In addition, emerging research themes in the field of circular SCF were identified and discussed, and research propositions are proposed to delineate future research directions.

Greensill Capital and the securitisation of supply chain financing

ABSTRACT The non-bank financial institution Greensill Capital pioneered platform-based supply chain financing and the securitisation of supply chain debt, then controversially extended the business to lending funds to firms in the productive economy based on anticipated future invoices. By rolling over these supposedly short-term and liquid loans, this mechanism provided unsecured long-term funding to risky businesses. The article examines how regulatory and political arbitrage, and the ambiguity of a positioning on the edge of legality, enabled Greensill to challenge the established boundaries between the financial and the productive domains.

An intelligent method for supply chain finance selection using supplier segmentation: A payment risk portfolio approach

The COVID-19 pandemic-driven financial crisis grew significant interest among firms to adopt supply chain finance (SCF) to optimize working capital for the financial stability of the supply chain. However, it is impractical for firms with a diverse and extensive supplier base to strategize the SCF solutions for individual suppliers by assessing their financial risk. Hence, this study conceptualizes an intelligent method to demonstrate how supplier segmentation based on suppliers’ payment risk portfolios helps supply chain practitioners to assess suppliers’ financial risk and strategize manageable supply chain finance solutions for them. This method employs a stochastic optimization model to compute suppliers’ optimum payment risk portfolios and generate a supplier segmentation matrix to offer supply chain practitioners the cognitive ability to select appropriate SCF solutions for their suppliers. The proposed method can be implemented into an AI-driven explainable recommendation system to aid supply chain practitioners in applying smart strategic thinking in supply chain finance decision-making.

Supply chain finance and innovation efficiency: An empirical analysis based on manufacturing SMEs.

This paper firstly demonstrates the positive and negative effects of supply chain finance on the innovation efficiency of China's small and medium-sized enterprises (SMEs) in the manufacturing industry from the theoretical point of view. Based on the data of 267 manufacturing companies in China Growth Enterprise Market from 2015 to 2019, the DEA-SBM method was used to measure the comprehensive innovation efficiency of different companies, and it was further decomposed into technological innovation efficiency and organizational innovation efficiency. Afterwards, it conducts an empirical analysis through the double fixed effect model, and explores the difference in the impact of supply chain finance on innovation efficiency in enterprises with different industries and different property rights. The results show that supply chain financial services have a strong positive impact on the comprehensive innovation efficiency, technological innovation efficiency and organizational innovation efficiency of manufacturing SMEs. Further, supply chain finance has the most significant improvement on the technological innovation efficiency of the sample of private traditional enterprises, but it has a significant inhibitory effect on the organizational innovation efficiency of the sample of state-owned high-tech enterprises. Therefore, this paper suggests that the development of supply chain financial services should increase support for traditional manufacturing industries; appropriately tilt resources to private enterprises; improve relevant supply chain financial laws and regulations, establish and improve corresponding institutional arrangements, and encourage state-owned enterprises to participate in market competition.

The effect of SMEs' ambidextrous innovations on supply chain financing performance: balancing effect and moderating effect

PurposeThis study empirically investigates how ambidextrous innovations and their balancing affect the supply chain financing performance (SCFP) of small and medium-sized enterprises (SMEs), based on signaling theory. Moreover, this study explores the moderating effect of the breadth and depth of digital technology deployment on the relationship between ambidextrous innovations and the SCFP of SMEs.Design/methodology/approachA mixed-methods design is used, including a qualitative study and a quantitative study. Qualitative data have been collected from six multi-cases in different industries. Questionnaire data have been collected from 259 SMEs in China, and a multiple regression model is used to verify the research hypotheses.FindingsThe findings indicate that, in supply chain financing, both exploitative innovation and exploratory innovation are helpful in improving the SCFP of SMEs. For resource-constrained SMEs, a relative balance between exploitative innovation and exploratory innovation can help improve SCFP. The breadth of digital technology deployment can strengthen the relationship between exploitative innovation and SCFP, while the depth of digital technology deployment can weaken the relationship between exploratory innovation and SCFP. In addition, increasing the depth of digital technology deployment strengthens the positive correlation between the relative balance of ambidextrous innovations and SCFP.Practical implicationsTo effectively obtain supply chain financing, SMEs can either concentrate their limited resources on a single type of innovation or use relative balance strategies to simultaneously pursue two innovations. In addition, in the process of obtaining supply chain financing by ambidextrous innovations, SMEs should appropriately deploy digital technologies.Originality/valueThis study first deconstructs the impact mechanism of ambidextrous innovation capabilities on SCFP based on signaling theory, and then discusses the balancing effect of ambidextrous innovations on SCFP in the cases of resource-constrained SMEs. This study also goes further and finds the negative moderating effect of digital technology deployment in the process of supply chain financing.

PROTOCOL: Effects of interventions to improve access to financial services for micro-, small- and medium-sized enterprises in low- and middle-income countries: An evidence and gap map.

PROTOCOL: Effects of interventions to improve access to financial services for micro-, small- and medium-sized enterprises in low- and middle-income countries: An evidence and gap map.

The value of blockchain technology in supply chains with capital constraints: from the perspective of demand volatility

AbstractBlockchain technology (BCT) has the potential to revolutionize the supply chain financing (SCF) system and mitigate the detrimental effects of demand volatility on SCF. As one of the first to examine the effects of BCT implementation in SCF from the perspective of demand volatility, we focus on the impacts of BCT on equilibrium and whether the retailer has the incentive to adopt BCT. We perform a comparative analysis of the Stackelberg game involving three parties under scenarios with and without BCT adoption. We find that when the demand volatility reduction coefficient is sufficiently large, BCT can facilitate a reduction of the ordering quantity while still sustaining the same service level, thus avoiding excessive inventory, and reducing the associated risk of bankruptcy. Additionally, the decreased bankruptcy risk enabled the bank to reduce interest rates. The adoption of BCT can improve the profit of the retailer when the adoption cost of BCT is sufficiently low. Our findings provide management insights into when the small and medium‐sized enterprises should adopt BCT and the interactive decision‐making of all parties in the SCF business after BCT adoption.

Does green credit financing mode with cap‐and‐trade scheme really benefit all members?

AbstractThere is a never‐ending debate about whether the cap‐and‐trade mechanism is a valid means of achieving carbon reduction. In this study, we examine it from the perspective of supply chain financing, as the cap‐and‐trade scheme appears to be an excellent solution to avoid the carbon emission requirements imposed by green credit financing services. We develop a theoretical framework for comparing three distinct kinds of financing modes: bank credit financing, green credit financing, and green credit financing with a cap‐and‐trade scheme. Based on Stackelberg game with stochastic demand, we then derive optimal outputs for the manufacturer and wholesale prices for the supplier. Counterintuitively, the green credit financing mode is less profitable for manufacturers with low investment in clean production due to stringent carbon emission requirements, yet it is advantageous for the supplier through a higher wholesale price. Conversely, the green credit financing combined with cap‐and‐trade scheme will result in a different situation in which the manufacturer will benefit from the green credit's lower interest rate, but the cap‐and‐trade mechanism will diminish the supplier's power in the Stackelberg game and reduce her profits. Finally, from the perspective of social welfare, the green credit financing mode with cap‐and‐trade scheme will not always benefit for the whole society. Even though it can improve the profit of the manufacturer and consumer surplus, it may lead to higher carbon emission and reduce profits of the supplier when the investment in clean production technology is limited.

Enhancing Construction Enterprise Financial Performance through Digital Inclusive Finance: An Insight into Supply Chain Finance

Digital Inclusive Finance (DIF) is a novel approach that employs digital technology to foster the development of inclusive finance, which can effectively alleviate the financing constraints of enterprises. This paper empirically tests the relationship between DIF and the financial performance of construction enterprises, with a focus of supply chain finance (SCF). The findings indicate that DIF can enhance the financial performance of construction enterprises, and SCF is one of the mechanisms through which DIF affects the financial performance of construction enterprises. Moreover, the cross-sectional analysis reveals that the impact of DIF on financial performance is more pronounced in firms with characteristics of private capital-holding and high operating pressure. This study not only enriches the research perspectives of DIF, but also provides valuable insights for policymakers to formulate effective policies.