Blockchain-Enabled Supply Chain Finance and SME Liquidity Resilience in Emerging Markets

Abstract

One of the important e-tools, which plays a vital role in improving the transparency and flow of transactions and liquidity availability for small and medium sized enterprises (SMEs) in emerging markets, is blockchain supply chain finance. Delayed payments, lack of collateral, poor credit records and reliance on large customers are all financial challenges that many SMEs encounter. This paper examines the benefits of blockchain supply chain finance for supporting greater liquidity resilience for SMEs through the secure verification of the invoice, the faster settlement process, smart contracts, traceability and sharing of trusted data between the supplier, buyer and financial institution. One key takeaway from the study is that the use of blockchain technology facilitates transparency, making transaction history more accessible and less subject to manipulation by either parties.The other key result of the research is the improvement in transparency that blockchain technology brings, which makes it easier to find past data and easier to manipulate neither party. The findings show that SMEs that have access to finance platforms are better able to gain access to working capital, quicker payment cycles, lower financing costs and respond to cash flow disturbances, where they do so via blockchain technology. However, countries in the emerging markets are being constrained by low digital readiness, regulatory uncertainty, integration costs, cyber security issues, and lack of digital knowledge. In conclusion, the paper argues that overall, blockchain supply chain finance can help SMEs to be more liquidity resilient, complementing the function of financial institutions, technology providers, regulators, and anchor firms. The study offers practical solutions to building inclusive, transparent and resilient financing mechanisms for SMEs in emerging economies.