How supply chain finance promote carbon emission reduction in manufacturing firms—Evidence from Chinese market

This paper provides evidence of the role of supply chain finance (hereinafter referred to as SCF) in the development of the manufacturing industry in China. As the world's largest manufacturing country and the second-largest economy, China presents a unique case for this study. Utilizing data from A-share manufacturing companies in Shanghai and Shenzhen from 2008 to 2021, we examine the impact of SCF on carbon emission reduction among manufacturing enterprises in China. The study finds that SCF contributes to reducing carbon emissions in manufacturing companies. After conducting a series of robustness tests and controlling for potential endogeneity issues, this conclusion remains valid. Regarding the transmission mechanism, SCF's contribution to carbon emission reduction in manufacturing firms occurs through the pathways of corporate financial availability and green technology innovation. Further research shows that the promotion effect of SCF on carbon emission reduction of manufacturing enterprises is more obvious in areas with strong environmental regulations and high level of digital economy development, as well as manufacturing enterprises with high supply chain concentration and strong management ability.