Supply Chain Finance, Fintech Development, and Financing Efficiency of SMEs in China

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

This is a cutting-edge topic in the area of fintech and finance generally. The authors dealt with the correlation between fintech and the development of supply chain finance in China. The evidence is potent and the literature review is solid as well. I would suggest the authors to consider more case studies to support their arguments. But basically this is a publishable and good research article. 

Author Response

Reviewer #1

1、This is a cutting-edge topic in the area of fintech and finance generally. The authors dealt with the correlation between fintech and the development of supply chain finance in China. The evidence is potent and the literature review is solid as well. I would suggest the authors to consider more case studies to support their arguments. But basically this is a publishable and good research article.

Response: Thank you for the positive comments. We agree with your suggestions on the case studies and have incorporated two into Section 1 (page 2) and Section 6.1 (page 13) of the revised manuscript. Below is the brief information on the two cases.

（1）Ant Group's Agricultural Supply Chain Finance Model: Led by Ant Group, in collaboration with MYbank and China Continent Property & Casualty Insurance, this model involves leading supply chain companies such as Mengyang Group, Kerchin Cattle Industry, and Yiguo Fresh. It provides supply chain financial services ranging from loans to sales for upstream large-scale breeding enterprises and downstream agricultural material sales enterprises, significantly improving the financing efficiency of the entire supply chain partners (Wang,2019).

（2）Baowu Group's Ouyeel Platform: Ouyeel, a supply chain finance platform under Baowu Group, focuses on the steel industry. Baowu Group, together with leading enterprises such as Sinotrans and Taiyuan Iron & Steel (Group) Co., Ltd. (TISCO), connects Ouyeel e-commerce and Ouyeel Logistics on one end, and banks such as Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB) on the other end. It provides supply chain finance, e-commerce transaction services, and information services to all raw material suppliers, steel production enterprises, mid- and downstream distributors, and end customers, thereby enhancing financing efficiency for all participating enterprises.

[1]Wang Yuan, Mao Min. Research on Supply Chain Finance Models of E-commerce Platforms in China—Taking Ant Financial, JD, and Suning as Examples. Logistics Engineering and Management, 2019, 41(03): 75-78.

Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

 

The paper addresses a very interesting topic in the SCF field, the research methodology is considered appropriate and the implications valuable.

Author Response

Reviewer #2

1、The paper addresses a very interesting topic in the SCF field, the research methodology is considered appropriate and the implications valuable.

Response: We are deeply grateful for your positive feedback. In this round of revision, we have focused on enhancing the readability and clarity of the manuscript, aiming to elevate it to a higher standard.

Reviewer 3 Report

Comments and Suggestions for Authors

The paper presents valuable research but requires improvements in readability, methodological justifications, and practical policy discussions. With refinements, it can make a significant contribution to the literature on supply chain finance and SME financing in China.

Abstract & Introduction

The abstract effectively summarises the research objectives, methodology, findings, and significance. However, some sentences are overly complex, making it difficult for a non-specialist audience to grasp the main points quickly.

So, clarifying and simplifying complex sentences is essential to improve readability. Moreover, the problem statement should be enhanced by briefly linking it to existing research gaps and including a straightforward research question in the introduction.

Literature Review & Hypothesis Development

The literature review is extensive and well-structured. However, it could be more of a critical discussion of potential weaknesses or inconsistencies in past studies. Also, it would be great to present the hypotheses in a separate subsection with numbered points for clarity.

Methodology

The methodology section clearly explains data sources, sample selection, and variable definitions. The use of DEA (Data Envelope Analysis) is appropriate, but the justification for choosing this over alternative methods (e.g., Stochastic Frontier Analysis) is missing. The description of control variables is comprehensive but lacks justification for their inclusion. The instrumental variable approach and propensity score matching (PSM) tests strengthen the study's robustness.

Hence, it is recommended that the choice of DEA as the main method be justified over alternatives. In addition, the rationale for control variables should be explained to ensure transparency and provide more details on potential biases and how they were mitigated.  

Empirical Analysis & Findings

In terms of findings, regression results are well presented, with clear explanations of coefficients and statistical significance. The robustness checks add credibility, but the discussion of limitations in empirical estimation is minimal, and the discussion lacks an interpretation of the practical impact.

Policy Implications

The study provides strong, well-grounded policy recommendations. The section connects theoretical findings with real-world applications. However, the discussion is generic and lacks specific stakeholder-oriented advice. Therefore, stakeholders should be specified, and recommendations should be tailored accordingly. Perhaps provide examples of successful supply chain finance models in China to illustrate practical implementation. In addition, it discusses potential unintended consequences of fintech and supply chain finance on SMEs, such as financial exclusion or over-reliance on digital platforms.

Conclusion & Limitations

The conclusion effectively summarises key findings. The limitations section is a positive addition but lacks depth regarding how future research can address these gaps. Therefore, the discussion of research limitations should be expanded. The study focuses only on listed SMEs, which may not fully capture the experience of non-listed SMEs. And finally, suggest specific future research directions, such as exploring sectoral differences in fintech adoption.

Language, Structure & Presentation

Some sentences are overly complex and could benefit from simplification. Some sections also have minor grammatical errors and awkward phrasing.

References (in-text citation) need to be reconsidered to be consistent.

The last paragraph in the introduction should introduce the rest of the paper.

 

Comments on the Quality of English Language

The English could be improved to express the research more clearly.

Author Response

You can download the Word attachment for a more comfortable reading experience.

Reviewer #3

The paper presents valuable research but requires improvements in readability, methodological justifications, and practical policy discussions. With refinements, it can make a significant contribution to the literature on supply chain finance and SME financing in China.

Response: Thank you very much for your insightful and constructive comments. We have diligently addressed each of your detailed suggestions (as outlined below) and incorporated the corresponding revisions throughout the manuscript.

1、Abstract & Introduction

The abstract effectively summaries the research objectives, methodology, findings, and significance. However, some sentences are overly complex, making it difficult for a non-specialist audience to grasp the main points quickly. So, clarifying and simplifying complex sentences is essential to improve readability. Moreover, the problem statement should be enhanced by briefly linking it to existing research gaps and including a straightforward research question in the introduction. The last paragraph in the introduction should introduce the rest of the paper.

Response: Thank you for the suggestions and we have made the following changes in the revised manuscript.

(1) we have revised the introduction as well as other sections to simplify complex sentences and improve readability.

(2) We put forward the research problem statement Section 1 (page 2) and an overview of the paper's structure in the introduction.

(3) The research gap was discussed after reviewing the literature in Section 2.4 (page 6). The review of the literature shows at least a few gaps. First, content-wise, existing studies predominantly concentrate on supply chain finance models, their influence on operational efficiency, and their role in mitigating financing constraints. However, there is a notable gap in the quantitative analysis of how supply chain finance affects financing efficiency. This study addresses this gap by utilizing the Data Envelopment Analysis (DEA) model to quantify financing efficiency and employing panel data analysis to directly assess the extent of this impact. Second, in terms of the research subject, existing research often involves a wide range of complex subjects, which unavoidably brings in company-specific noises and may contaminate the results. This study narrows its focus to a specific type of enterprises – "Specialized, Refined, Niche, and Innovative" (SRNI) SMEs. Such enterprises are characterized by their high technological content, significant human capital investment, and light asset structure, making their financing challenges more prominent and pertinent to contemporary issues. Third, existing studies have shown that fintech can enhance supply chain finance’s transparency, efficiency, and security, thereby better-serving SMEs. This paper further emphasizes the "catalytic role" of fintech in supply chain finance, optimizing various aspects of supply chain finance through technological innovation, thereby more effectively addressing the financing challenges faced by SMEs.

(4) The structure of the manuscript is described at the end of the introduction on page 3.

2、Literature Review & Hypothesis Development

The literature review is extensive and well-structured. However, it could be more of a critical discussion of potential weaknesses or inconsistencies in past studies. Also, it would be great to present the hypotheses in a separate subsection with numbered points for clarity.

Response: Thank you very much for the advice. We took two actions to adopt your suggestion in the revised manuscript.

(1) We added a critical discussion of potential weaknesses in the past studies (i.e., research gap) in Section 2.4 (page 6). Please see the response to comment #1 for details.

(2) We restructured the "Literature Review and Hypothesis Development" into two separate sections: “Literature Review” (Section 2) and “Theoretical Development of Hypotheses” (Section 3). The two hypotheses are proposed in Section 3.1 and 3.2, respectively.

3、Methodology

The methodology section clearly explains data sources, sample selection, and variable definitions. The use of DEA (Data Envelope Analysis) is appropriate, but the justification for choosing this over alternative methods (e.g., Stochastic Frontier Analysis) is missing. The description of control variables is comprehensive but lacks justification for their inclusion. The instrumental variable approach and propensity score matching (PSM) tests strengthen the study's robustness. Hence, it is recommended that the choice of DEA as the main method be justified over alternatives. In addition, the rationale for control variables should be explained to ensure transparency and provide more details on potential biases and how they were mitigated.

Response: We appreciate the reviewer's insightful comments and provide the justification for choosing the Data Envelopment Analysis (DEA) approach over other methods and control variables. We incorporate the following content in the revised manuscript.

1、Justification of the DEA approach

DEA is a non-parametric method for evaluating the relative efficiency of decision-making units (DMUs) with multiple inputs and outputs. By employing linear programming, DEA constructs an efficiency frontier, which serves as a benchmark for comparing the performance of each DMU. The DEA model avoids errors caused by inappropriate functional form assumptions and allows for cross-sectional comparisons of financing efficiency across firms with different scales and units (Zhang et al.,2020).

While the Stochastic Frontier Analysis (SFA) suggested by the reviewer is also a robust method for efficiency measurement, it requires a pre-specified functional form and imposes stricter homogeneity requirements on data. Since the financing efficiency of SMEs is influenced by multiple factors (e.g., policy environment, supply chain relationships, technological innovation), they are difficult to express with a simple functional form. Considering the heterogeneity of SMEs across industries, regions, and development stages, we believe DEA is more appropriate for this study.

In addition, the DEA approach has been widely used to measure financing efficiency (Sun et al., 2023; Yang et al., 2023). We added a detailed explanation of the DEA model in Section 4.2 (page 8) to better elaborate its advantages.

2、Selection of control variables

Below is the list of chosen control variables and their purpose:

Return on Assets (ROA) reflects profitability;

Top 10 Shareholders' Ownership Ratio captures ownership concentration;

Cash Asset Ratio measures liquidity;

Long-term Capital Liability Ratio indicates capital structure;

Firm Size controls for scale effects;

Equity Ratio reflects financial stability;

Revenue Growth Rate captures growth potential.

These variables collectively account for a firm's profitability, ownership structure, liquidity, capital structure, size, financial stability, and growth, which are critical determinants of financing efficiency. The selection of control variables is also based on previous studies and aims to avoid multicollinearity while comprehensively reflecting key factors influencing financing efficiency (e.g., Guo et al., 2023; Li & Zhan, 2025).

References:

[1]Zhang Yueling, Wang Qing, Wang Xiaojing. Research on the Input-Output Efficiency of Blockchain Concept Stock Listed Companies in China—Based on DEA and Malmquist Index Models. Friends of Accounting, 2020,38(15): 153-160.

[2]Sun Lijun, Meng Xianwei, Li Xintong. Research on the Financing Efficiency and Influencing Factors of Cultural Enterprises under the Background of Industrial Upgrading. Review of Economy and Management, 2023, 39(04): 134-145.

[3]Yang Shenghao, Jiang Ren'ai, Shen Yue. Research on the Impact of the Launch of the Sci-Tech Innovation Board (STAR Market) on Corporate Financing and Sci-Tech Innovation Efficiency. Soft Science, 2023, 37(02): 27-34.

[4]Guo Jinlu., Jin Ning, Zhang Jie. Technology Finance and Corporate Financing Efficiency: Empirical Evidence from High-Tech Enterprises in the Yangtze River Delta Urban Agglomeration. Journal of Central University of Finance & Economics, 2023 43(10), 68-80.

[5]Li Wei, Zhan Kaimin. Digital Transformation and Financing Efficiency of SMEs: Empirical Evidence from Listed Companies on the ChiNext Board. Friends of Accounting, 2025, 43(04), 17-25.

4、Empirical Analysis & Findings

In terms of findings, regression results are well presented, with clear explanations of coefficients and statistical significance. The robustness checks add credibility, but the discussion of limitations in empirical estimation is minimal, and the discussion lacks an interpretation of the practical impact.

Response: Thanks for the constructive feedback. Regarding the limitations of the empirical estimation, we acknowledge that this study may face the following issues:

1、Data only come from the public firms of “SRNI” SMEs, which may limit the generalizability of the conclusion to all SMEs (including the private firms).

2、Lack of control for the impact of macroeconomic and policy changes.

3、Potential measurement bias

We have added this discussion to Section 6.3 (page 14) of the manuscript.

We also enriched the practical implications of the conclusions in Section 5 (page 10).

Implications of H1: By leveraging the credit endorsement of core enterprises and real transaction data from the supply chain, supply chain finance could reduce the risk assessment costs for financial institutions. This also enables SMEs to access lower-interest financing, optimizes capital flow within the supply chain, shortens the cash conversion cycle, and improves capital utilization efficiency. Supply chain finance provides stable financial support to SRNI SMEs, allowing them to allocate more resources to technology development and innovation.

Implications of H2: In practice, fintech innovations and digital solutions can optimize supply chain finance processes, effectively addressing the financing challenges of SMEs. Technologies such as blockchain and big data enable real-time recording and sharing of transaction data, enhancing information transparency. Big data analytics and artificial intelligence allow faster and more accurate assessments of SMEs' credit risk and repayment capacity, providing tailored financing solutions to meet their needs.

5、Policy Implications

The study provides strong, well-grounded policy recommendations. The section connects theoretical findings with real-world applications. However, the discussion is generic and lacks specific stakeholder-oriented advice. Therefore, stakeholders should be specified, and recommendations should be tailored accordingly. Perhaps provide examples of successful supply chain finance models in China to illustrate practical implementation. In addition, it discusses potential unintended consequences of fintech and supply chain finance on SMEs, such as financial exclusion or over-reliance on digital platforms.

Response: Thanks for the comments. We have added recommendations to different stakeholders in Section 6.2 (page 14) of the manuscript. Specifically:

At the government level: Governments could introduce more policies to support the development of supply chain finance, such as tax incentives and risk compensation funds, to encourage financial institutions and core enterprises to participate. Such a policy can reduce the operational costs of supply chain finance and enhance the participation of all parties, thereby better-serving SMEs.

To supply chain partners: Core enterprises along the supply chain can actively engage in supply chain finance by providing credit endorsement and financing support to upstream and downstream SMEs with growth potential. SMEs should strengthen internal management, establish robust financial and accounting systems, and ensure data accuracy and transparency. Strong internal management can improve SMEs' credit ratings and build trust with financial institutions. They should also explore suitable supply chain finance models based on their development needs.

As for financial institutions, they should develop more customized supply chain finance products tailored to the characteristics of SMEs, such as accounts receivable financing, inventory financing, or order-based financing. Fintech companies should create more supply chain finance solutions for SMEs, such as AI-based risk assessment tools or blockchain platforms.

We have also included a practical example – Ouyeel Platform under Baowu Group –in Section 6.1 (page 13) to illustrate this. Ouyeel is a supply chain finance platform focused on the steel industry. Baowu Group, in collaboration with leading enterprises such as Sinotrans and Taiyuan Iron & Steel (Group) Co., Ltd.(TISCO), connects Ouyeel E-commerce and Ouyeel Logistics on one end, and financial institutions such as Industrial and Commercial Bank of China and China Construction Bank on the other end. It provides supply chain finance, e-commerce transaction services, and information services to raw material suppliers, steel producers, mid- and downstream distributors, and end customers, thereby enhancing financing efficiency for all participants.

6、Conclusion & Limitations

The conclusion effectively summarises key findings. The limitations section is a positive addition but lacks depth regarding how future research can address these gaps. Therefore, the discussion of research limitations should be expanded. The study focuses only on listed SMEs, which may not fully capture the experience of non-listed SMEs. And finally, suggest specific future research directions, such as exploring sectoral differences in fintech adoption.

Response: Thanks for the comments. We have revised Section 6 of the manuscript to expand the discussion on the limitations of the study (Please see the response to comment #4 for details) and propose suggestions for future research directions.

7、Language, Structure & Presentation

Some sentences are overly complex and could benefit from simplification. Some sections also have minor grammatical errors and awkward phrasing. References (in-text citation) need to be reconsidered to be consistent.

Response: We have thoroughly reviewed and revised the entire manuscript, including sentence structure, grammar, wording, and references, to ensure clarity and readability.

Author Response File: Author Response.docx