Overcoming SMEs Financing and Supply Chain Obstacles by Introducing Supply Chain Finance

Abstract

Keeping in view the importance of small and medium enterprises (SMEs) for the growth of a nation, we must also keep an eye on the challenges faced by those SMEs. There are various kinds of financing and supply chain options available for SMEs but they still face lot of hindrances. This paper would help us to understand why SMEs are important for the development of any country and how could we help the SMEs from facing challenges related to financing and supply chain. This study further highlights the key financing issues faced by SMEs and also focuses on major supply chain challenges confronted by the SMEs. This study put emphasis on the concept of supply chain finance (SCF) and that how SCF could help SMEs to overcome those challenges. In addition, this paper also points out the benefits and prospects of SMEs. Even though the concept of SCF is still in developing phase but it has shown significant assistance to SMEs in order to grow further.

How different types of financial service providers support small- and medium- enterprises under the impact of COVID-19 pandemic: from the perspective of expectancy theory

“…With the growing financing demands of SMEs, FSPs gradually focus on mitigating the information asymmetry to extend the lending business toward SMEs. The extant research has explored how FSPs support SMEs in addressing their financing problems through innovative financing modes and emerging technology (Abbasi et al 2018;Du et al 2020;Lekkakos and Serrano 2016). Specifically, FSPs innovate the financing modes by collaborating with other stakeholders, such as supply chain participants, to collect information to replace traditional lending.…”

“…Moreover, emerging information technologies such as the internet of things (Abbasi et al 2018), blockchain (Chod et al 2020;Du et al 2020), and big data (Hung et al 2020), are applied to mitigate information asymmetry by improving the range, richness, and quality of information about SMEs. However, most studies aim to offer innovative financing approaches with an underlying assumption that the economic and business environment is relatively stable (FSPs are willing to support SMEs under such conditions).…”

“…First, at the firm-level, the size of the FSPs' financial resource is positively associated with the ability to withstand external risks (Beck 2013). Extant research demonstrates that the innovative financing modes and emerging information technologies could help mitigate information asymmetry, which is much dependent on the relevant informatization capability and human resource of professionals (Abbasi et al 2018;Gomm 2010;Sheng 2020), thus, making it difficult for FSPs that lack corresponding resources and capabilities to support SMEs. Second, at the interfirm-level, focal firms, as the business organizer and coordinator of the whole supply chain, play an essential role in transmitting information of SMEs to FSPs (Lekkakos and Serrano 2016;Wu et al 2019).…”

“…However, these issues have not been explored yet. The existing literature on financing support for SMEs from FSPs primarily focus on the innovations in the financing modes (Abbasi et al 2018;Lekkakos and Serrano 2016) and emerging technologies (Du et al 2020;Hung et al 2020), assuming that the external environment is relatively stable, while FSPs mostly consider their economic return. Even though it is foreseeable that the COVID-19 pandemic will significantly change the practices of FSPs (Goodell 2020), as the business environment deteriorates, FSPs tend to perform more social responsibilities to support SMEs (Talbot and Ordonez-Ponce 2020).…”

Problems Of Optimization Of Sources Of Financing Of Small And Medium Businesses

“…The work (Chong et al, 2019) shows the role of small and medium enterprises in the Dutch economy based on an analysis of resource use. In another study, emphasis is placed on the concept of the proposal of chain financing (SCF), as this can help small and medium-sized businesses overcome the problems associated with financing (Abbasi, Wang, & Alsakarneh, 2018). Economists (Yoshino & Taghizadeh-Hesary, 2014) in their work conduct risk analysis in the process of financing small and medium enterprises in Asia.…”