Fintech Adoption and the Financing Efficiency of Small and Medium Sized Enterprises: A Digital Inclusive Finance Perspective

Futai Zhang; Licun Zhong; Le Yu

doi:10.54691/kbxqmq36

Authors

Futai Zhang AmazingX Academy, Shenzhen, China
Licun Zhong AmazingX Academy, Shenzhen, China
Le Yu AmazingX Academy, Shenzhen, China

DOI:

https://doi.org/10.54691/kbxqmq36

Keywords:

Fintech adoption, SME financing efficiency, financing constraints, digital inclusive finance, mediation analysis, moderation analysis, China.

Abstract

This paper examines how fintech adoption at the firm level affects the financing efficiency of small and medium-sized enterprises in China, and identifies financing constraints as the transmission channel and the regional level of digital inclusive finance as the moderating condition. Using a panel of 15,432 firm-year observations drawn from enterprises listed on the SME board and the ChiNext board of the Shenzhen Stock Exchange between 2013 and 2023, financing efficiency is measured through a slacks-based super efficiency frontier model and fintech adoption is captured from the disclosure text of annual reports. Baseline regressions with year and industry fixed effects show that fintech adoption exerts a significant positive effect on financing efficiency, with a one standard deviation increase in adoption raising efficiency by approximately 4.9 percent of the sample mean. Mediation analysis establishes that financing constraints partially transmit this effect, accounting for roughly 30.6 percent of the total, while the remaining share is generated directly through better alignment between the timing of fund raising and the timing of expenditure. Moderation analysis shows that the regional digital inclusive finance index significantly amplifies the return to adoption, indicating that firm-level digital capability and local financial infrastructure are complementary rather than substitutable. Heterogeneity tests reveal that the efficiency gain is concentrated among non-state-controlled enterprises, whose access to bank credit is not supported by implicit guarantees, and is larger in central and western provinces than in the eastern coastal provinces, suggesting that digital adoption partially substitutes for a thin traditional financial infrastructure. Robustness checks using an alternative radial efficiency measure and a one-period lag of the core explanatory variable confirm the stability of the core findings.

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