Can the digital economy promote FinTech development?

Abstract Based on theoretical analysis and both the digital economy development index and the FinTech development index, we use a time and individual two‐way fixed effects model to study the impact of the digital economy on FinTech, and the mechanism at work. Our results show that the digital economy can promote FinTech development and that this development level will increase by 12.4117 standard deviations each time the development level of the digital economy increases by one standard deviation. The underlying mechanism is that the digital economy augments the level of technological innovation to promote FinTech development; the digital economy enhances the FinTech development level by improving the quality of credit assets. Further research shows that the digital economy's promotion effect on FinTech is heterogeneous, given the proportion of agricultural loans: the higher the proportion of agricultural loans, the lower the digital economy's promotion effect on FinTech.