How does digital finance affect financial mismatch?

This study explores the mechanisms and heterogeneity of the impact of digital finance on financial mismatch in China, utilizing data on digital finance and financial mismatch among Chinese A-share listed companies for the period from 2012 to 2021. The results offer the following key findings: (1) digital finance notably diminishes financial mismatch, and a battery of endogeneity and robustness tests validate the resilience of these results; (2) digital finance alleviates financial mismatch by addressing issues related to financing constraints, information asymmetry, and digital transformation; (3) a heterogeneity analysis shows that the mitigating effect of digital finance on financial mismatch is more pronounced in regions that are more developed financially, non-state-owned enterprises, high-tech industries, and low-polluting industries.