DOES DIGITAL FINANCE MOVE TOGETHER WITH TECHNOLOGY INNOVATION IN CHINA?

Zhu Wenhui (), Zhang Jiajieth (), Hu Chuanxia () and Dong Hanwei ()
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Zhu Wenhui: Chang’an University, China
Zhang Jiajieth: Chang’an University, China
Hu Chuanxia: Chang’an University, China
Dong Hanwei: Chang’an University, China

Bulletin of Monetary Economics and Banking, 2025, vol. 28, issue 2, 313-330

Abstract: Existing academic research has predominantly examined the unidirectional impact of digital finance on technological innovation, thereby neglecting the reciprocal interplay between these two domains. This study fills this gap by investigating the long-term bidirectional cointegrated relationship between digital finance and technological innovation. Using panel cointegration estimation methods on panel data from 286 Chinese cities during 2011–2020, empirical results reveal a long-term co-movement between digital finance and technological innovation. Pooled Mean Group estimation demonstrates that digital finance makes significant contributions to technological innovation in both long-term and short-term contexts. However, sub-sample analyses show that digital finance consistently boosts technological innovation in cities with high financial development, but its impact is short-term in cities with low financial development. These findings provide crucial insights for policymakers to formulate targeted measures that foster the synergistic development of digital finance and technological innovation.

Keywords: Digital finance; Innovation; Financial development (search for similar items in EconPapers)
JEL-codes: G14 O33 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:28:y:2025:i:2g:p:313-330

DOI: 10.59091/2460-9196.2567

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