Digital finance and corporate innovation: evidence from China

ABSTRACTIn this paper, we investigate the impact of digital finance on corporate innovation based on Chinese A-share listed companies from 2011 to 2017. We find that digital finance has a significant promotion effect on corporate innovation. The development of digital finance promotes enterprise innovation, increasing the number of patent applications and authorizations. The development of digital finance mainly promotes corporate innovation through two channels. First, digital finance improves bank competition and credit availability to promote corporate innovation; second, digital finance reduces financing constraints and financing costs of enterprises to promote corporate innovation. We also conduct a rich set of robustness tests and obtain consistent conclusions.KEYWORDS: Digital financeinnovationfinancing constraintsbank competitionJEL CLASSIFICATION: G10G30G21G23 Disclosure statementNo potential conflict of interest was reported by the author(s).Additional informationFundingThe work was supported by the Beijing Social Science Foundation [No. 22JCC066].