Quantity or quality: Novel insights into the impact of digital finance on innovation

Xiaoke Zhu, Hanqi Wu and Qiyun Deng

Finance Research Letters, 2024, vol. 65, issue C

Abstract: Despite prior literature shedding light on the role of digital finance in enhancing innovation quantity, research on whether and how it influences innovation quality remains limited. To address this gap, this study investigates the causal relationship between digital finance and the innovation performance of manufacturing enterprises, and identifies the inclusive effects of digital finance in China. We provide compelling evidence that digital finance generates significantly positive effects on innovation performance, encompassing both quantity and quality dimensions. Mechanism analyses demonstrate that financial constraints serve as a potential channel through which digital finance operates. We also observe the inclusive effects of digital finance on innovation performance. Specifically, the innovation improvements induced by digital finance are more pronounced for small and medium-sized enterprises (SMEs) and state-owned enterprises (SOEs).

Keywords: Digital finance; Inclusive effects; High-quality innovation; Financial constraints; Manufacturing sector (search for similar items in EconPapers)
JEL-codes: G32 O16 O31 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006330

DOI: 10.1016/j.frl.2024.105603

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