Do fintech applications promote regional innovation efficiency? Empirical evidence from China

The rise of fintech in the past decade has received growing scholarly attention. Does the application of fintech promote innovation efficiency at the regional level? Will fintech heterogeneously affect a different stage of innovation? Motivated by these questions, this paper studies the impact of fintech on innovation efficiency and the spatial spillover effects of fintech by using regional-level data on China. We employ a two-stage DEA method to evaluate the innovation efficiency, namely, the R&D efficiency and launching efficiency, of different innovation processes. We conduct an empirical test by using the spatial Durbin model in combination with the fintech development index. The results suggest that fintech promotes overall innovation efficiency and launching efficiency but less affects R&D efficiency. Fintech also exhibits adverse spatial spillover effects on the surrounding regions in the launching stage. We further studied the effects of the breadth and depth of fintech on innovation and the impacts on different types of patents. The results show a heterogeneous impact of fintech, which generates regional development policy implications in the digital era. • Fintech innovations have developed rapidly in recent years and increasingly transform financial services. • We employ a two-stage DEA method to evaluate the R&D efficiency and launching efficiency of different innovation processes. • Fintech promotes overall innovation efficiency and launching efficiency but less affects R&D efficiency. • Fintech also exhibits adverse spatial spillover effects on the surrounding regions in the launching stage.