Does network governance based on banks’ e-commerce platform facilitate supply chain financing?

Abstract

Purpose

The purpose of this paper is to provide a framework to illustrate how network governance based on banks’ e-commerce platform reduces loan risks and mitigates credit rationing in supply chain financing (SCF).

Design/methodology/approach

The authors conceptualize network governance in terms of authority structure and interorganizational mechanism dimensions, and derive the model of its determinants through arguments drawn from the existing literature. Structural equation modeling is employed to test the theoretical model on data collected from a sample of 271 independent supply chain trading partners in rural China.

Findings

The findings indicate that network governance based on banks’ e-commerce platform could integrate the operations and finances in supply chain management to solve the problems of information asymmetry, costly monitoring, insufficient qualified collaterals and mitigate farmers’ credit rationing. The collaborative credit-granting mechanism and collaborative debt enforcement mechanism formed by the authority structure and interorganizational mechanisms are the key factors to realize the complete compatibility of incentives. The bank e-commerce platform can provide a foundation for the authority structure and interorganizational mechanisms to enhance the predictability of applicants’ transaction and then safeguard the financial exchanges in supply chain.

Practical implications

The research results indicate that it is important to support farmers to establish long-term transaction relationships with leading enterprises through organizational innovation in the development of agricultural industrialization and build a visualization platform for SCF through technological innovation.

Originality/value

This paper contributes to the limited knowledge about network governance mechanisms in SCF by illustrating the model of network governance based on banks’ e-commerce platform and its determinants.

Citation

Chen, Z., Chen, J., Zhang, Z. and Zhi, X. (2019), "Does network governance based on banks’ e-commerce platform facilitate supply chain financing?", China Agricultural Economic Review, Vol. 11 No. 4, pp. 688-703. https://doi.org/10.1108/CAER-06-2018-0132