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Supply chain finance participation and outward FDI: The roles of productivity, financial frictions, and information asymmetry

Author

Listed:
  • Chen, Haitao
  • Huang, Xinfei
  • Xu, Yuheng
  • Zhao, Chenglin

Abstract

This study examines the impact of participation in supply chain finance (SCF) on enterprises' outward foreign direct investment (OFDI) decisions, contributing to the literature on how SCF shapes firms' internationalization. Using panel data on China's non-financial listed enterprises from 2008 to 2022, we employ a staggered difference-in-differences (DID) approach together with a novel instrumental variable strategy based on input–output linkages to identify the causal effect of SCF on OFDI. The results show that SCF participation significantly promotes firms' outward FDI, operating primarily through enhanced productivity, reduced financial frictions, and alleviated information asymmetries. These findings provide new insights into the role of financial innovation in facilitating firms' global expansion and offer policy-relevant implications for promoting enterprise internationalization.

Suggested Citation

  • Chen, Haitao & Huang, Xinfei & Xu, Yuheng & Zhao, Chenglin, 2026. "Supply chain finance participation and outward FDI: The roles of productivity, financial frictions, and information asymmetry," Economic Modelling, Elsevier, vol. 159(C).
    • Handle: RePEc:eee:ecmode:v:159:y:2026:i:c:s026499932600088x
    DOI: 10.1016/j.econmod.2026.107559
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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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