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Does digital inclusive finance influence the entry and exit of agro-processing enterprises? Evidence from China

Author

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  • Lu, Futao
  • Xia, Xinqu
  • Wu, Yan

Abstract

Research on digital inclusive finance (DIF) has primarily focused on rural households, while its impact on the agro-processing industry, a key driver of rural development, remains underexplored. This study uses a novel county-level panel dataset (2014–2022) to examine how the multi-dimensional aspects of DIF (coverage, depth, and digitalization) affect enterprise entry and exit. We find that DIF significantly promotes enterprise growth by facilitating market entry and reducing exit risks. This positive effect is primarily driven by the "inclusive" dimensions (coverage and depth) of DIF, which alleviate financing constraints. Conversely, the "digital" dimension of DIF introduces technological barriers that hinder less-adaptive firms. Moreover, the heterogeneity analysis reveals that private enterprises, being more financially vulnerable under traditional finance, benefit the most. These findings highlight DIF’s dual role as both an enabler of inclusive growth and a potential source of inter-firm relocation.

Suggested Citation

  • Lu, Futao & Xia, Xinqu & Wu, Yan, 2026. "Does digital inclusive finance influence the entry and exit of agro-processing enterprises? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 89(C), pages 165-177.
    • Handle: RePEc:eee:ecanpo:v:89:y:2026:i:c:p:165-177
    DOI: 10.1016/j.eap.2025.11.034
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    References listed on IDEAS

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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