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FinTech, bank proximity, and corporate innovation: Evidence from China

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  • Dong, Xiaolin
  • Zhu, Shengming
  • Qi, Hao

Abstract

This study investigates the evolving relevance of geographic banking advantages in corporate innovation and examines how financial technology (FinTech) disrupts traditional spatial dependencies in innovation financing. Using a panel of Chinese listed firms from 2011 to 2021, we find that bank proximity remains positively associated with innovation performance, yet the development of FinTech significantly weakens this relationship. This attenuation effect is more pronounced for underlying FinTech technologies and for proximity to small banks. The plausible mechanism is that FinTech mitigates financing constraints by reducing information asymmetries associated with lending distance, which in turn fosters innovation through increased investment in human capital, innovation-supporting infrastructure, and R&D expenditure. Heterogeneity tests further suggest that FinTech’s innovation-enhancing effect is stronger for small firms, startups, and firms in regions with underdeveloped transportation or rugged terrain. Our findings underscore the transformative potential of FinTech in overcoming geographic barriers and fostering a more efficient and inclusive allocation of innovation capital.

Suggested Citation

  • Dong, Xiaolin & Zhu, Shengming & Qi, Hao, 2026. "FinTech, bank proximity, and corporate innovation: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 632-649.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:632-649
    DOI: 10.1016/j.eap.2026.01.053
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