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Effect of supply chain finance on supply chain trade
Thang Doan  1@  
1 : Banking Academy of Vietnam  (BAV)

This research paper investigates the influence of supply chain finance (SCF) on increasing countries' involvement in supply chain trade (SCT). Utilizing a dataset of 1,755,930 country-pair observations from 1995 to 2020, the study examines how SCF, particularly factoring services in source countries, impacts SCT. SCT is measured by the share of domestic value added in gross exports, indicating a country's contribution to international trade. Factoring, a key component of SCF, enhances liquidity by allowing firms to sell accounts receivable, thereby meeting working capital requirements and alleviating financial constraints. The findings show that SCF significantly boosts a country's SCT, especially in industries that are more dependent on liquidity, a result that remains robust after addressing endogeneity and conducting various robustness checks. Additionally, the effect is more pronounced when the destination country experiences higher levels of political risk, investment risk, and uncertainty. During the financial crisis, SCF also supports SCT growth, though its impact is relatively smaller. Our findings suggest important implications for policymakers, financial institutions, and businesses.


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