Does FinTech development facilitate firms' innovation? Evidence from China

This study examines the impact of financial technology (FinTech) development on firms' innovation. Using Chinese listed firms' panel data from 2011 to 2021 and the FinTech indicators we constructed, we find that FinTech development significantly facilitates firms' innovation by alleviating their information asymmetry and financing constraints. This finding continues to hold after a series of robustness tests and endogeneity discussions. Moreover, we find that the effect of FinTech development on innovation is more pronounced for non-state-owned firms, firms in the central region, and high-tech firms. These results offer important policy implications as they demonstrate the crucial role of FinTech in the high-quality development of the real economy.