The Incentive Effect of Digital Finance on Innovation of Small- and Medium-Sized Enterprises Considering Heterogeneity: An Empirical Study Based on Chinese-Listed Firms

Wanteng Zheng () and Zixuan Ye
Additional contact information
Wanteng Zheng: The School of Management, Fudan University, Shanghai 200051, China
Zixuan Ye: The School of Management, Hangzhou Dianzi University, Hangzhou 310018, China

Sustainability, 2024, vol. 16, issue 19, 1-17

Abstract: The development of digital finance provides new opportunities for solving the dilemma of innovation financing for small- and medium-sized enterprises (SMEs). This study empirically examined the heterogeneous characteristics and mediating mechanisms of digital finance and its incentive effects on SME innovation using panel data of Chinese and GEM board-listed companies from 2010 to 2021. It was found that digital finance can significantly incentivize SME innovation; however, there are differences in efficacy among digital finance sub-dimensions, with breadth of coverage having the strongest effect, followed by depth of use, and digitization degree having a non-significant effect. Meanwhile, there is heterogeneity in the incentive effect of digital finance on SME innovation, which is manifested as private SMEs and SMEs in regions with stronger financial regulations and a higher degree of marketization being more likely to be incentivized by digital finance to innovate. In addition, digital finance can indirectly incentivize SMEs to innovate through three paths: alleviating financing constraints, improving risk tolerance, and solving information asymmetry.

Keywords: digital finance; SMEs; innovation; heterogeneity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/19/8533/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/19/8533/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:19:p:8533-:d:1489893

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().