Distributed Ledger Fintech Systems for Improving Financial Transparency and Trust in Supply Chain Finance

Abstract

The growing use of FinTech based on blockchain solutions have gradually affected financial coordination mechanisms in supply chain finance networks where secure transaction verification, real-time visibility and records that cannot be changed have become essential to inter-organization collaboration. Risks related to supply chain finance systems include information asymmetry, slow verification and lack of trust between partners. The conventional monetary procedures often limit transparency, which may cause sabotage of collaboration and increased financial risk. A designed survey was created and it was distributed to practitioners operating in supply chain finance and digital financial platforms resulting in almost 275 questionnaire responses that were valid. An analysis of the data was done using Partial Least Squares Structural Equation Modelling (PLS-SEM) with the use of SmartPLS. The results suggest that the impact of Blockchain FinTech Capability on Financial Transparency has a positive significant impact on the Trust among the partners in the supply chain. Also, Blockchain capability exhibits a direct positive effect on the result of trust. The mediation analysis proves that there is a partial mediating role of Financial Transparency between the relationship between Blockchain capability and Trust. The findings would add to the previous FinTech and supply chain finance literature that clarifies the way in which blockchain-based functions facilitate financial visibility and inter-organizational trust. The practical use of the research relates to the problem that the adoption of blockchain is useful to develop better collaboration and financial stability among firms.