The unintended consequences of strict financial regulation: evidence from China’s New Asset Management Regulation

This article examines how China’s New Asset Management Regulations, an exogenous regulatory shock, affects corporate supply chain finance. Based on a sample of listed Chinese firms (2013–2023) and a generalized DID model, we find strict financial regulation restrains firms’ supply chain finance participation. This inhibitory effect is stronger for firms with greater financing constraints and lower R&D intensity. Mechanism analysis shows the regulation mainly curbs supply chain finance by worsening firms’ liquidity constraints and lowering their risk-bearing capacity. Further analysis finds that the regulation-induced drop in supply chain finance destabilizes firms’ customer and supplier relationships. This study clarifies how strict financial regulation impacts corporate supply chain finance, offering new evidence for emerging economies to design differentiated regulatory targets and channel financial resources to precisely support supply chains.