Corporate Nature, Financial Technology, and Corporate Innovation in China

Abstract

Corporate innovation has become the main driving force for the long-term development of enterprises, but the characteristics of high risk, long cycle, and high capital demand of corporate innovation activities expose enterprises to high financial rejection. Financial technology, formed by combining digital technology with traditional financial services, is gradually changing the financial service model and providing new ideas for corporate investment and financing. In this study, using the data of non-financial and non-real estate listed companies in Shanghai and Shenzhen markets, A-shares from 2015 to 2020, we examine the effect of financial technology on corporate innovation through a fixed-effects model and investigate the influence of corporate characteristics on the relationship between financial technology and innovation through a moderating-effects model. The results show that financial technology enhances the ability to serve real enterprises by reshaping financial services, which in turn effectively drives an increase in corporate innovation, and the mechanism is conditionally heterogeneous. In addition, the moderating effect of the firm’s nature is found to be more significant in non-state-owned firms, high-technology firms, and firms in the growth and maturity stages by life cycle. The policy implications of this study are to continuously promote theoretical research, to guide the development of fintech, and to improve the construction of financial technology infrastructure. Additionally, to deepen the integration of financial technology with real enterprises and establish differentiated financial technology support tools, so as to improve the precision of promoting enterprise innovation.

Enterprise life cycle, financial technology and digital transformation of banks—Evidence from China

“…Bettinger (1972) originally proposed that financial technology is the combination of commercial banking knowledge, modern management techniques and computers, which represents the integration of finance and technology. The biggest difference between financial technology and traditional finance is ‘technologisation’ (Gao & Jin, 2022). The financial services provided by financial technology combine a variety of emerging technologies, such as big data, cloud computing, artificial intelligence, blockchain and so on.…”

“…Considering the omitted variables and endogeneity issues that bring bias to the results of this study, this study refers to Gao and Jin (2022). It chooses financial technology lagged one period (LFintechi) as the instrumental variable and uses the 2SLS method to perform robustness tests.…”

The impact of the digital economy on Chinese enterprise innovation based on intermediation models with financing constraints

“…The coexistence of high risk and high profit makes it particularly important for enterprises to make decisions about innovation. Gao et al [ 6 ] found that the problem between the large amount of R&D funding required by enterprises and traditional forms of finance has long been an obstacle to innovation. Williams [ 7 ] discovered that the digital economy has solved the financing problem of enterprises with its unique advantages.…”

Does Fintech Development Reduce Corporate Earnings Management? Evidence from China

“…The existing research shows that fintech development can strengthen banks' risk control ability [11][12][13][14], improve commercial banks' efficiency [15,16] and promote competition between banks [17] through "enabling", thus forcing commercial banks to make digital transformations and change the traditional financial service mode. At the same time, fintech development can effectively ease corporate financing constraints [18] and promote entrepreneurship [19], innovation [20,21] and total factor productivity [22,23], thereby enhancing the ability of the financial sector to serve the real economy and facilitating the high-quality development of the economy.…”

“…Many existing studies focus on the impact of fintech development on traditional financial institutions [11][12][13][14][15][16][17]. Emerging studies find that fintech has positive effects on corporate financing, innovation and efficiency [18][19][20][21][22][23]. Few papers study the impact of fintech development on corporate governance.…”