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Misconception of providing supply chain finance: Its stabilising role

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  • Zhang, Tiantian
  • Zhang, Cherry Yi
  • Pei, Qifan

Abstract

Supply chain management aims to facilitate the flows of goods, information, and money. The first two flows have been studied extensively. Supply chain finance is the last piece of this puzzle. However, little empirical evidence can be found to support the benefits, if any, of practicing supply chain finance. In this study, we empirically test the relationship between supply chain finance and not only the firm's financial performance, but also extend the knowledge of this discipline by studying the relationship between supply chain finance and inventory performance and bankruptcy risk for the focal firm. We use a large size longitudinal data of 18,448 US listed firms spread out 8 broadly defined industries over 48 years. The results of this study support that supply chain finance is effective but not on firm's financial performance and inventory management efficiency. Its role is to stabilise supply chain through reducing the bankruptcy of the focal firm. The effect varies in different industries. In particular, mining, manufacturing and transportation industries receive the most benefit.

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  • Zhang, Tiantian & Zhang, Cherry Yi & Pei, Qifan, 2019. "Misconception of providing supply chain finance: Its stabilising role," International Journal of Production Economics, Elsevier, vol. 213(C), pages 175-184.
    • Handle: RePEc:eee:proeco:v:213:y:2019:i:c:p:175-184
    DOI: 10.1016/j.ijpe.2019.03.008
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    15. Shi, Jinyan & Liu, Xu & Li, Yanxi & Yu, Conghui & Han, Yushan, 2022. "Does supply chain network centrality affect stock price crash risk? Evidence from Chinese listed manufacturing companies," International Review of Financial Analysis, Elsevier, vol. 80(C).
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    17. Jingjing Dong & Qiancheng Zhang, 2024. "Sustainable Development of the Real Economy: Supply Chain Finance and Enterprise Financialization," Sustainability, MDPI, vol. 16(9), pages 1-18, April.
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