Role of Fintech adoption in the impact of sustainable policy intervention on enterprise transformation in resource-based cities: Evidence from China

The National Plan for Sustainable Development of Resource-based Cities (2013–2020) (NPSDRC) is a pivotal initiative of the Chinese government to promote the transformation of resource-based cities. Meanwhile, rapid Fintech development provides a vital opportunity for the transformation of such cities. Exploiting the implementation of NPSDRC as an exogenous shock and employing the difference-in-differences approach to investigate how NPSDRC affects the transformation of enterprises in resource-based cities and the role of Fintech adoption in this transformation. The result indicates that NPSDRC hinders enterprises' total factor productivity (TFP) in resource-based cities. The mechanism analysis reveals that NPSDRC hampers enterprise transformation via incentivizing firms to apply end-of-pipe treatments. Specifically, in the short term, this policy has prompted firms in resource-based cities to employ measures aimed at reducing the amount of pollutants during the post-production and pre-emission stages, which leads to an increase in firm costs, and thus reduces their TFP. Moreover, we observe that Fintech development weakens the negative impact of NPSDRC on firms' TFP. The heterogeneity results imply that this negative impact is more prevalent for state-owned enterprises and heavily polluting enterprises. This policy notably hinders the transformation of enterprises in regions with rigorous environmental law enforcement. We provide empirical evidence for formulating sustainable development policies for resource-based cities in other countries.