Supply Chain Finance and Corporate Efficiency Upgrading: Dual Evidence from Listed Company Announcements and Local Policy Documents
CHENG Cheng, TIAN Xuan, XU Zhaoyi
School of Finance and Statistics, Hunan University; PBC School of Finance, Tsinghua University; School of Economics and Management, Tsinghua University
Summary:
In the “Guiding Opinions on Actively Promoting Supply Chain Innovation and Application” , a key measure is to “Actively and steadily develop supply chain finance (SCF),” to ensure China's position as an important center of global supply chain innovation and application. Governments at all levels in China have issued relevant policies to support the development of local SCF. However, can SCF effectively help enterprises overcome credit rationing and promote overall improvements in their production and operational efficiency？ What are the channels through which SCF can facilitate the upgrading of production and operational efficiency？ These questions are worthy of further exploration. In this study, we conduct an empirical analysis of the impact of SCF on the production and operational efficiency of listed companies. The analysis is based on the examination of 3.2 million listed company announcements and 1.9 million local government policy documents, from 2007 to 2019. The findings are as follows. First, SCF has a significant positive impact on a firm's total factor productivity (TFP) and efficiency. Second, SCF effectively enhances corporate efficiency through the channels of breaking credit rationing and optimizing enterprise financing, strengthening mutual investment and relationship embedding, and promoting cooperative R&D and enhancing innovation. Third, if local governments introduce policies to encourage and support SCF, companies can improve their efficiency by developing SCF. Fourth, of the various types of SCF businesses, the innovation model, supplier financing, and fund and service recipients contribute to greater efficiency improvement. A series of heterogeneity tests reveal that high factor-led companies, private companies, and those located in less marketized and western regions experience more significant effects when implementing SCF. Our study makes the following contributions. First, we draw on the specialized vocabulary of different supply chain businesses and propose a text analysis method combining the “dictionary method” with the “business method” to effectively extract information on whether listed companies have engaged in SCF, along with the specific types and methods used. Second, we identify and validate three channels of SCF: financing optimization, relationship embedding, and cooperative R&D, which contribute to the enhancement of corporate efficiency. We provide an in-depth analysis of how SCF influences companies' production and operational efficiency. Additionally, by utilizing multiple databases such as CSMAR, Wind, and Qichacha.com, we empirically analyze joint investments and equity collaborations within a supply chain involving listed companies, suppliers, and customers. Our findings enrich theories on improving corporate efficiency. Third, we examine the effectiveness of local government SCF support policies by analyzing relevant policy documents. We empirically investigate the impact of these policies on local enterprises' adoption of SCF and the subsequent improvement in corporate efficiency. Our study has important implications for enterprises in terms of seeking cooperation opportunities, improving innovation and R&D capabilities, and enhancing competitiveness. Enterprises should seize the opportunity to develop SCF and leverage Internet of Things technology, to enable real-time logistics information tracking. They can also utilize big data analysis for inventory optimization, increase the digital and integrated transformation of supply chain management, expand mutual investment and relationship embedding with upstream and downstream enterprises in the supply chain, and establish information system interconnection within the supply chain. This can then enhance their competitiveness in the global value chain. Our study also provides empirical evidence that national and local governments should support the development of SCF. We find that companies located in regions with lower levels of marketization and less developed economies can achieve more significant efficiency improvements by developing SCF. Therefore, local governments in such regions should carefully consider national policies that support supply chain innovation and application. They should actively respond to these strategies, consider their local economic and social development realities, and coordinate efforts to implement supporting policies for local supply chain innovation. By constructing and optimizing local SCF service systems, they can create further high-quality development opportunities for local enterprises.
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