Financial service providers and banks’ role in helping SMEs to access finance
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 10 January 2018
Issue publication date: 22 February 2018
Abstract
Purpose
Despite their crucial role in sustaining national economies, small and medium enterprises (SMEs) are beset by the constraint of financing at better conditions. The purpose of this paper is to compare supply chain finance (SCF) solutions provided by commercial banks and financial service providers (FSPs) that help SMEs access financing.
Design/methodology/approach
This study looks at multiple case studies using in-depth interviews with focal firms (lenders) to answer the research questions. In-depth interviews were conducted with three Chinese FSPs and three commercial banks providing working capital to the same SMEs. The unit of analysis is SCF solutions that have made the companies competitive in the industry.
Findings
The case studies show that the acquisition of transaction information and business credit in SCF can reduce ex ante information asymmetry. SCF utilizing receivable transfers, closed-loop business, relational embeddedness, and a combination of outcome control and behavioral control can also reduce ex post information asymmetry. For these reasons, compared with commercial bank-dominated SCF, SCF adopted by FSPs in the supply chain can better reduce information asymmetry.
Originality/value
This study contributes to the emerging literature exploring the impact of SCF on SMEs accessing financing. In particular, this study provides supply chain management and operations insights on SCF and their consequent influence. Previous research has focused on the direct dyadic relationship between lenders and borrowers while neglecting supply chain effects. Uniquely, this study explores the different ways commercial banks and FSPs implement SCF solutions.
Keywords
Acknowledgements
The authors acknowledge that the research underlying this paper was supported by the National Natural Science Foundation of China (Nos 71272155, 71232011, 71672189).
Citation
Song, H., Yu, K. and Lu, Q. (2018), "Financial service providers and banks’ role in helping SMEs to access finance", International Journal of Physical Distribution & Logistics Management, Vol. 48 No. 1, pp. 69-92. https://doi.org/10.1108/IJPDLM-11-2016-0315
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited