The mitigating effects of blockchain adoption on supply chain financing disruptions under crises: Evidence from China

The paper investigates the negative effect of the COVID-19 crisis on supply chain financing in China. It examines the role of blockchain adoption in mitigating such disruptions by using data from Chinese firms between 2015 and 2022 and employs textual analysis to construct indexes on firms' blockchain innovation and supply chain risk exposure. We find that firms with high supply chain risk experience a more significant reduction in formal and informal financing during the COVID-19 pandemic. Nevertheless, blockchain adoption helps provide more resilience to supply chain financing disruptions in the crisis by enhancing information transparency, corporate governance, and production network efficiency. Further analysis shows that the alleviation effect is heterogeneous and more pronounced for firms with private ownership and lower social trust. The main results remain consistent using alternative measures based on Generative Pre-trained Transformer (GPT), a large language model. Our paper highlights the importance of digital technology advancement in protecting supply chain security under crises.