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Study on the Mitigation Mechanisms of Supply Chain Finance for Financing Constraints of SMEs in China and Its Risk Management

Author(s)

Xiang Li

Affiliation(s)

Shandong Vocational Institute of Clothing Technology, Taian, Shandong, China

Abstract

Supply Chain Finance (SCF) refers to a financing model where financial institutions connect core enterprises with upstream and downstream enterprises, and flexibly utilize a variety of financial products and services. As an innovative financing model, SCF takes banking financial institutions as the carrier, centers on core enterprises within the supply chain, and provides a series of financial services for Small and Medium-sized Enterprises (SMEs) in the supply chain, thereby offering new insights for addressing the financing challenges faced by SMEs. This study deeply analyzes the core mechanisms through which SCF alleviates SMEs’ financing constraints, specifically covering four dimensions: information disclosure, credit enhancement, process optimization, and capital closed-loop management. Simultaneously, it systematically identifies the main types of risks in SCF operation, including core enterprise credit risk, operational risk, information technology risk, legal and compliance risk, and market risk. By integrating the regulatory environment and typical cases, this study reveals the significant effectiveness and unique advantages of SCF in alleviating SMEs’ financing difficulties, while also pointing out the complexity and challenges inherent in its risk management. Finally, from multiple perspectives-including the public sector, financial institutions, core enterprises, and SMEs-countermeasures and suggestions are proposed to improve the SCF ecosystem, strengthen risk control capabilities, and enhance service efficiency, so as to provide references for promoting high-quality economic development.

Keywords

Supply Chain Finance; Small and Medium-Sized Enterprises; Financing Constraints; Risk Management; Information Asymmetry; Credit Risk

References

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