Supply Chain Finance and Total Factor Productivity: Evidence from China’s Publicly Listed Companies

Abstract

Supply chain finance plays a supporting function in the development of the real economy, and it is becoming increasingly significant to China's economic growth. Our empirical analysis utilizes a dataset of Chinese A-share listed companies spanning 2008 to 2023. To identify the causal relationship, we estimate a two-way fixed effects model to assess how supply chain finance influences firm-level total factor productivity and explore the potential mechanisms involved. The results indicate that supply chain finance can improve the total factor productivity of enterprises through two mechanisms: improving the efficiency of resource integration and reducing agency costs, and this relationship is still valid after endogenous processing and a series of robustness tests. The heterogeneity analysis reveals that supply chain finance has a more apparent impact on raising total factor productivity in the case of small enterprise scale, low financing constraint, low industry competition and strong supply chain integration. The findings have dual implications: they extend the literature on the drivers of enterprise total factor productivity, while also providing theoretical and practical insights for enhancing supply chain modernization and advancing high-quality development in both firms and the broader economy.