Digital finance and enterprise financing constraints: Structural characteristics and mechanism identification

Using the panel data of A-share listed companies from 2011 to 2020, we demonstrate that the WW index can characterize the level of enterprise financing constraints in China more effectively. We investigate the effect of regional digital finance (DF) development on enterprise financing constraints. This study found that DF can significantly alleviate enterprise financing constraints, and the effect is greater for small and medium-sized enterprises (SMEs) and private enterprises. DF can partially correct the size discrimination and ownership discrimination of traditional finance on private SMEs, as well as the mismatch of financial resources. Further, the results revealed that DF can alleviate information asymmetry in the securities market and between banks and enterprises and improve the external financing capabilities of enterprises. Moreover, DF can increase the enterprise's total factor productivity (TFP) and optimize the internal financing capacity of enterprises. Overall, DF will significantly ease enterprise financing constraints.