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The effects of place-based information technology policy on digital finance development: Evidence from China

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  • Ai, Hongshan
  • Xiang, Lin
  • Tan, Xiaoqing
  • Yao, Haorui
  • Han, Li

Abstract

Using the Smart City Pilot (SCP) policy as a quasi-experiment, we evaluate the causal effect of place-based information technology policy on digital finance development with a difference-in-differences (DID) approach. Our DID estimates indicate that the SCP policy significantly boosts digital financial inclusion (DFI) in China. Relative to non-pilot cities, this policy increases the DFI index by 1.44 in pilot cities. This increase in the DFI index is mainly driven by the deepened usage of digital finance. Heterogeneity analyses show that the implementation of the SCP policy exerts larger influences on digital finance development in eastern cities, cities with high administrative levels or more education resources, and non-resource-based cities. Furthermore, the stimulated development of the information industry and the improved business environment are two important channels to explain the positive impact of the implementation of this place-based information technology policy on digital finance development.

Suggested Citation

  • Ai, Hongshan & Xiang, Lin & Tan, Xiaoqing & Yao, Haorui & Han, Li, 2024. "The effects of place-based information technology policy on digital finance development: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 521-544.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:521-544
    DOI: 10.1016/j.eap.2024.09.010
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