How does supply chain finance enhance firms' supply chain resilience?

This paper examines the causal relationship between supply chain finance and supply chain resilience from 2017 to 2023, providing essential insights into how financial mechanisms enhance adaptive capacities in unpredictable markets. Utilizing a two-way fixed effects model, the analysis demonstrates that supply chain finance markedly improves supply chain resilience by mitigating financial restrictions and augmenting total factor productivity (TFP). The findings underscore the critical role of supply chain finance as a facilitator of resilience, allowing firms to manage disruptions through enhanced liquidity management and operational efficiency. Nonetheless, heterogeneity is apparent in firm ownership and industry dynamics: state-owned enterprises (SOEs) demonstrate slower resilience in supply chain finance due to preferential resource allocation and policy support, while non-SOEs derive more significant benefits, albeit limited by restricted access to financing. Moreover, businesses marked by intense competition exhibit enhanced resilience driven by supply chain financing in contrast to less competitive sectors, indicating that market dynamics influence the efficacy of supply chain finance. The study emphasizes the necessity of customizing supply chain finance methods to the individual settings of firms and industries, promoting targeted financial interventions to rectify structural inequalities. These insights enhance scholarly discussions on supply chain sustainability and provide practical advice for policymakers and businesses seeking to strengthen supply chains in the face of increasing global uncertainties.