Does fintech drive corporate capital structure towards the MM theorem’s predictions?

While existing research shows that FinTech can reduce financial frictions and reshape firms’ financing conditions, less is known about whether it changes how capital structure affects firm value. Using data on Chinese listed firms from 2011 to 2023, this paper examines whether FinTech development alters the valuation effects of alternative financing methods and moves financing outcomes toward the low-friction benchmark implied by the MM theorem. We find that FinTech significantly narrows the differential valuation effects of bond financing and equity financing: the negative marginal effect of bond financing becomes less negative, while the positive marginal effect of equity financing becomes smaller. Mechanism analysis indicates that this effect is mainly driven by the financial-friction channel, although it is partially offset by the banking concentration channel. The effect is more pronounced in large firms and in industries without policy support, but weaker under weak financial regulation, high industry monopolization, and low regional marketization. The paper contributes by making the MM benchmark empirically discussable in a realistic setting and by showing that FinTech affects not only financing conditions, but also the pricing relevance of capital structure.