ADB; Lee, Hsiao-Hui; Yang, S. Alex; Kim, Kijin2021-10-052021-10-052019-12N/AN/AN/AN/Ahttps://www.adb.org/publications/role-fintech-supply-chain-financehttps://hdl.handle.net/20.500.14540/5525This 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.34Finance sector developmentFinancial technologySME lendingTrade finance