Misconception of providing supply chain finance: Its stabilising role

Tiantian Zhang, Cherry Yi Zhang and Qifan Pei

International Journal of Production Economics, 2019, vol. 213, issue C, 175-184

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.

Keywords: Supply chain finance; Tobin's Q; Altman Z-score; Inventory turnover (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:213:y:2019:i:c:p:175-184

DOI: 10.1016/j.ijpe.2019.03.008

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