The Role of Fintech in Mitigating Information Friction in Supply Chain Finance
This paper examines how financial technology (fintech) reduces “information friction” to help close financing gap in the supply chain by lowering the probability of a good firm being misclassified as bad.
Recent advances in fintech, such as blockchain and artificial intelligence, could help improve the efficiency of supply chain finance. “Double marginalization” makes a bank’s optimal fintech investment level lower than the socially optimal level. This calls for mechanisms to incentivize or complement banks’ investment in fintech.
- Literature Review
- Model Setup
- Closing MSMEs' Financing Gap through Fintech
- Relationship between Type-A and Type-B Technologies
- Investing in Fintech