Does supply chain finance business model innovation improve capital allocation efficiency? Evidence from the cost of capital

Abstract

<abstract> <p>Based on the sample of China's A-share listed companies from 2008 to 2021 and the text analysis data of supply chain finance, this study examines whether the supply chain finance business model innovation can improve the efficiency of capital allocation. Results showed that: 1) Firms with a supply chain finance business model have a low cost of capital, particularly the cost of equity capital; 2) The supply chain finance business model reduces the cost of capital in firms with low strategic commitment and a high degree of information asymmetry; 3) The supply chain finance business model innovation can reduce the cost of capital when the degree of competition in the external product market is low and the internal enterprise scale is large. The above findings can greatly inform the optimization of equity finance market supply, the promotion of innovation, and the provision of investment and financing and business decisions that are consistent with sustainable development goals.</p> </abstract>

Navigating Growth: The Nexus of Supply Chain Finance, Digital Maturity, and Financial Health in Chinese A-Share Listed Corporations

“…Supply chain finance integrates the upstream and downstream product systems of the supply chain, covering financing needs at every stage, and provides enterprises with services such as capital support and risk management [2]. The goal of supply chain finance is to optimize various segments of the supply chain through means such as financing, settlement, and logistics, thereby enhancing operational efficiency and competitiveness, reducing capital costs, and accelerating cash flow [3], leading to a win-win situation for all parties involved [4]. To encourage enterprises to use supply chain finance to alleviate financing difficulties, the Chinese government has introduced a series of policy measures to steadily promote the development of supply chain finance and to actively encourage the provision of industry chain supply chain financial services [5].…”