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How does patient capital empower supply chains? An empirical investigation of spillover effects from government-guided funds

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  • Li, Xin
  • Xiao, Xinlong

Abstract

This paper examines the impact of patient capital investment on alleviating the financing constraints of upstream and downstream firms in the supply chain. The findings reveal that patient capital investment generates a positive spillover effect within the supply chain, alleviating the financing constraints of core suppliers and customers. This spillover effect is more pronounced when the interdependency between supply chain firms is stronger and when the financing capacity of these key partners is weaker. Mechanism analysis indicates that patient capital operates through two channels: capital cost effect (improving accounts receivable turnover efficiency of suppliers) and credit expansion effect (increasing the proportion of credit loans for customers). Further analysis shows that this supply chain spillover effect significantly enhances the investment efficiency and innovation level of major suppliers and customers. The findings provide theoretical and empirical insights for policies aimed at fostering patient capital, promoting industrial and supply chain optimization and upgrading, and building a modern industrial system.

Suggested Citation

  • Li, Xin & Xiao, Xinlong, 2026. "How does patient capital empower supply chains? An empirical investigation of spillover effects from government-guided funds," Finance Research Letters, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finlet:v:91:y:2026:i:c:s1544612326000504
    DOI: 10.1016/j.frl.2026.109519
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    References listed on IDEAS

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    1. Biddle, Gary C. & Hilary, Gilles & Verdi, Rodrigo S., 2009. "How does financial reporting quality relate to investment efficiency?," Journal of Accounting and Economics, Elsevier, vol. 48(2-3), pages 112-131, December.
    2. Ren, Yousheng & Ren, Baoquan, 2025. "Does patient capital enhance supply chain resilience in manufacturing enterprises? Evidence from China’s Listed Companies," Finance Research Letters, Elsevier, vol. 86(PG).
    3. Scott Richardson, 2006. "Over-investment of free cash flow," Review of Accounting Studies, Springer, vol. 11(2), pages 159-189, September.
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