The Usage Depth of Digital Finance and SMEs’ Inefficient Investment: Evidence from the A-share Market

Yinan Zhang

doi:10.54691/bcpbm.v30i.2467

Authors

Yinan Zhang

DOI:

https://doi.org/10.54691/bcpbm.v30i.2467

Keywords:

Digital finance, Inefficient investment, Financialization.

Abstract

In recent years, digital inclusive finance has developed rapidly in China. The academic community generally believes that digital finance, as a supplement to traditional financial institutions, has eased the financing constraints of enterprises. But from another point of view, digital finance may cause enterprises to be over-financialized and thus lose efficiency. This paper tries to verify this channel. Through OLS estimation and panel fixed effect regression, this paper finds that an increase of 1% in usage depth of digital inclusive finance will lead to a rise of 0.0029 in the inefficient investment level of middle-sized and small enterprises (SMEs). Heterogeneity analysis shows that digital inclusive finance has a greater impact on the inefficient investment level of large enterprises. This study helps to clarify the negative effects of digital finance.

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