The Impact of Supply Chain Finance on SMEs’ Working Capital Efficiency: Evidence from A-Share Listed Companies

As an important institutional innovation to alleviate the financing difficulties of small and medium-sized enterprises (SMEs), supply chain finance (SCF) has attracted increasing attention for its potential to improve firms’ internal capital turnover efficiency. Using a panel dataset of Chinese A-share listed companies from 2000 to 2024, this study employs a two-way fixed-effects model to systematically examine the impact of SCF on SMEs’ working capital efficiency, as measured by the cash conversion cycle (CCC).The empirical results indicate that participation in SCF significantly shortens the cash conversion cycle, thereby enhancing firms’ working capital efficiency. This finding remains robust after a series of robustness checks, including alternative variable specifications and endogeneity tests. Further mechanism analysis reveals that SCF improves working capital efficiency primarily through two channels: alleviating financing constraints and reducing financing costs, which enable firms to optimize their capital allocation and operational processes.Heterogeneity analysis shows that the positive effects of SCF are more pronounced in private enterprises and smaller firms, which typically face greater financing frictions compared to state-owned or larger enterprises. These findings highlight the differential impact of SCF across firm characteristics and emphasize its role in promoting inclusive financial development. Overall, this study provides new empirical evidence on the economic consequences of SCF and offers important policy implications for optimizing supply chain finance systems and supporting the sustainable development of SMEs.