Exchange Rate Volatility, Global Currency Fragmentation, and Supply Chain Financing: Evidence from European and African Firms

Exchange Rate Volatility, Global Currency Fragmentation, and Supply Chain Financing: Evidence from European and African Firms | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Exchange Rate Volatility, Global Currency Fragmentation, and Supply Chain Financing: Evidence from European and African Firms AKPOYIBO Akpobome Gregory, OGBOTOR Smith Maxwell, Abdulgaffar Muhammad, and 7 more This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9081866/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract Global supply chains increasingly depend on financial mechanisms that support liquidity and trade credit across borders, yet macro-financial instability may disrupt these arrangements. This study investigates how exchange rate volatility, cross-border credit availability, and global currency fragmentation influence supply chain financing among European and African firms, while examining the moderating role of domestic credit to the private sector. Using a balanced panel of 40 firms from 2010–2024 (600 firm-year observations), the study applies a multi-method empirical strategy combining two-way fixed effects, dynamic System-GMM estimation, and panel quantile regression to capture static, dynamic, and heterogeneous effects. Machine learning validation using Extreme Gradient Boosting (XGBoost) with SHAP analysis further assesses nonlinear relationships and predictive relevance of the explanatory variables. The econometric results indicate that exchange rate volatility and global currency fragmentation significantly reduce firms’ reliance on supply chain financing, whereas cross-border credit availability enhances trade credit financing within global production networks. Domestic financial development mitigates the adverse impact of exchange rate volatility, highlighting the stabilising role of strong banking systems. Quantile regression reveals heterogeneous effects across firms with different levels of supply chain financing. The machine learning validation confirms the predictive importance of macro-financial variables. The study contributes novel evidence by integrating macro-financial risks, firm characteristics, and machine learning validation within a unified framework, offering policy insights for strengthening financial resilience in global supply chains. Supply Chain Financing Exchange Rate Volatility Cross-border Credit Availability Global Currency Fragmentation XGBoost Machine Learning Validation Full Text Additional Declarations No competing interests reported. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9081866","acceptedTermsAndConditions":true,"allowDirectSubmit":true,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":607811332,"identity":"22b596d7-d94b-4f1f-b0c2-254348631d1b","order_by":0,"name":"AKPOYIBO Akpobome Gregory","email":"","orcid":"","institution":"Delta State University","correspondingAuthor":false,"prefix":"","firstName":"AKPOYIBO","middleName":"Akpobome","lastName":"Gregory","suffix":""},{"id":607811333,"identity":"d17234cc-7738-4d3c-8f8d-8e5aa70e2e6d","order_by":1,"name":"OGBOTOR Smith Maxwell","email":"","orcid":"","institution":"Delta State 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This study investigates how exchange rate volatility, cross-border credit availability, and global currency fragmentation influence supply chain financing among European and African firms, while examining the moderating role of domestic credit to the private sector. Using a balanced panel of 40 firms from 2010\u0026ndash;2024 (600 firm-year observations), the study applies a multi-method empirical strategy combining two-way fixed effects, dynamic System-GMM estimation, and panel quantile regression to capture static, dynamic, and heterogeneous effects. Machine learning validation using Extreme Gradient Boosting (XGBoost) with SHAP analysis further assesses nonlinear relationships and predictive relevance of the explanatory variables. The econometric results indicate that exchange rate volatility and global currency fragmentation significantly reduce firms\u0026rsquo; reliance on supply chain financing, whereas cross-border credit availability enhances trade credit financing within global production networks. Domestic financial development mitigates the adverse impact of exchange rate volatility, highlighting the stabilising role of strong banking systems. Quantile regression reveals heterogeneous effects across firms with different levels of supply chain financing. The machine learning validation confirms the predictive importance of macro-financial variables. 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