Supply Chain Finance and the Sustainable Growth of Chinese Firms: The Moderating Effect of Digital Finance

Abstract

Sustainable development is crucial to the survival and healthy development of enterprises, which is closely related to their financing situation. Supply chain finance is an effective way to improve and enhance the financing situation by easing financing constraints and reducing financing costs. As an important source of supply chain short-term financing, trade credit plays an important role in enterprise production and circulation. Taking Chinese listed companies from 2011 to 2020 as samples, this paper studied the impact of trade credit on sustainable growth and its internal mechanism. Furthermore, we analyzed the moderating effect of digital finance development on the influence of trade credit on sustainable growth. It is found that receiving trade credit benefited firms’ sustainable growth. Furthermore, study found that receiving trade credit has a greater positive impact on the sustainable growth of enterprises in regions with higher levels of financial development, high-tech industries, state-owned enterprises and small enterprises. Whereas, the provision of trade credit had an obvious inhibiting effect on the sustainable growth of enterprises in the regions with low level of financial development, non-high-tech industries, private enterprises and small enterprises. The results of the influencing mechanism showed that receiving trade credit promoted firm’s sustainable growth by “agency cost reducing effect,” while providing trade credit inhibited firm’s sustainable growth by “forcing effect.” In addition, the development of digital finance weakens the positive impact of trade credit financing on enterprises’ sustainable growth but strengthens the negative impact of providing trade credit on sustainable growth. From the perspective of sustainable growth, this paper explained the role of trade credit financing in alleviating the financing dilemma of enterprises, which is urgently needed by most emerging economies pursuing high-quality development. Therefore, in order to give full play to the role of trade credit financing, the government should actively create a good credit environment. At the same time, the government should vigorously develop digital finance to enhance its ability to serve the real economy.

Digital finance and M&As: An empirical study and mechanism analysis

“…Therefore, more digital infrastructure should be constructed at the early stage, through expanding the coverage of digital services to strengthen usage depth and promote digitalization level. [ 42 ] also proved that the larger the coverage breadth is, the more customers can be covered, which is also proved by [ 43 ].…”

Impact of Digital Supply Chain on Sustainable Trade Credit Provision: Evidence from Chinese Listed Companies

“…Furthermore, our study indicates that DSC of large enterprises can mitigate the unequal distribution of credit resources along the supply chain. Liu et al argued that offering TC was detrimental to the sustainability of enterprises [71]. However, the rational allocation of credit resources is a vital way to address the supply chain crisis and enhance the supply chain stability [72].…”

“…Based on data from other countries and specific industries on DSC, future research can further explore other potential mechanisms of DSC influencing TC provision. Second, we used the TF-IDF algorithm to replace the TF algorithm, which corrects the overestimation of common word weight and the underestimation of key feature word weight in existing research [71]. However, we still confront the inherent drawbacks of text analysis methods [38]; that is, the text of firms' annual reports cannot fully capture the process of DSC, and there is no consistent disclosure standard for DSC across firms.…”

Corporate Social Responsibility Practices, Corporate Sustainable Development, Venture Capital and Corporate Governance: Evidence from Chinese Public Listed Firms

“…On this basis, this paper adopts Van Horn's equilibrium sustainable growth model to measure CSD (Mukherjee & Sen, 2019;Ul Ain et al, 2022) because this model is widely used, and we are able to analyse CSD from the perspective of corporate profitability and competitiveness. The underlying assumption of the model is that there is no change in equity financing, the steady state variables remain constant, and the retention of earnings and debts are of significant importance (Fonseka et al, 2012;Liu et al, 2022).…”