Going out and bringing in: Impact of digital finance on firms' cross-regional investments

Cuihua Zhu and Jingyuan Yu

International Review of Financial Analysis, 2025, vol. 106, issue C

Abstract: Capital flows play a vital role in narrowing economic disparities across emerging markets. This study examines the impact of digital finance on the cross-regional investments (CRIs) of publicly listed companies in China using a comprehensive dataset from 2011 to 2021. Findings reveal that digital finance significantly promotes firm CRI by facilitating both outward investment (“going out”) and inward capital attraction (“bringing in”). These results remain robust across multiple validation methods, including Bartik instruments, placebo tests, and shock-based instrumental variable techniques. Mechanism analysis suggests that digital finance reduces both investment and financing costs while enhancing returns on investment. Heterogeneity analysis further reveals that the effects are more pronounced for nonstate-owned enterprises, asset-light firms, and merger-driven investments. These findings offer valuable implications for policymakers aiming to leverage digital finance to stimulate cross-regional capital flows in emerging economies.

Keywords: Digital finance; Cross-regional investments; Going out; Bringing in (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:106:y:2025:i:c:s1057521925006404

DOI: 10.1016/j.irfa.2025.104553

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