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Financial innovation in supply chains and debt contagion: evidence from manufacturing industries

Year: 2025

Type: article

Abstract: The ripple effect of debt contagion can incur severe economic consequences. This paper investigates how financial innovation in supply chains affects corporate debt contagion. Based on the data of manufacturing industries from 2015 to 2024, we offer compelling evidence that higher financial innovation in supply chains is associated with a lower possibility of debt contagion. This effect is more substantial among manufacturers belonging to more supply chain relationships and having more trade credit. Further research suggests that information transparency substantially inhibits debt contagion. The findings are still consistent after coping with endogeneity problems. This research enriches the supply chain research.

Source: Finance research letters

DOI: 10.1016/j.frl.2025.108382

Authors: Yang Liu, Lei Wang

Institution: Shihezi University

Language: English

Topic: Working Capital and Financial Performance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,730