Digital finance development, financial mismatches, and corporate shadow banking activities
Rui Yang,
Rongrong Li and
Xinyu Ge
China Economic Review, 2025, vol. 93, issue C
Abstract:
The existing research suggests that a rapid growth of corporate shadow banking (CSB) activities in China is linked to financial repression. However, it is unclear whether digital finance development (DFD) featured with financial inclusion helps contain the growth. By using a sample of Chinese A-share listed non-financial enterprises (NFEs) from 2011 to 2021, we examine the effect of DFD on CSB activities. We offer empirical evidence that DFD can help decrease such activities. Our findings remain robust even after tackling endogeneity issues and undertaking a set of robustness checks. Furthermore, we identify financial mismatches, such as financial resource mismatch and maturity mismatch, as key pathways by which DFD influences CSB activities. Our results highlight the significant role of DFD in enhancing resource allocation and, crucially, in fostering a more transparent and stable financial system.
Keywords: Digital finance development; Financial mismatches; Corporate shadow banking activities (search for similar items in EconPapers)
JEL-codes: G32 G38 O16 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:93:y:2025:i:c:s1043951x25001531
DOI: 10.1016/j.chieco.2025.102495
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