Supply chain finance and outward foreign direct investment

This study empirically examines the impact of Chinese A-share-listed companies' supply chain finance (SCF) application on outward foreign direct investment (OFDI) by textually analyzing SCF keywords from listed companies' announcements from 2010 to 2021. The results show that applying SCF can significantly increase OFDI. Having taken the Staggered Differences-inDifferences (DID) test, Propensity Score Matching (PSM) test, entropy balancing (EB) method, and IV test to solve potential endogeneity problems, the results remain robust. Further, alleviating financial constraints and strengthening total factor productivity are critical mechanisms of SCF on OFDI. Moreover, the location of firms in regions with higher levels of the rule of law or advanced financial technology could further amplify the positive impact of SCF on OFDI. Finally, compared with exports, firms are more likely to choose OFDI. Besides the depth and breadth of OFDI, the investment amount of OFDI is also increasing because of SCF.