Can digital inclusive finance promote the Internet business model? Empirical evidence from Chinese listed firms

In the era of the digital economy, the transition of traditional enterprises towards an internet-based business model represents a pivotal strategy for fostering high-quality development within the real economy. In this study, we use data of Chinese A-share listed companies from 2011 to 2020. From the perspective of financial services to the real economy, we empirically examine the impact of digital finance on the transformation of enterprise Internet business models and the underlying mechanisms. We find that the regional digital inclusive finance promotes the transformation of traditional enterprises to Internet business model. We also find the positive effect is more pronounced for enterprises that face higher financing constraints, have greater financialization and intangibility, and are more suitable for implementing the Internet business model. Additionally, this effect is notable for enterprises in regions with less developed traditional financial systems and lower urban resource endowment. Further test shows that the breadth and depth of digital finance can significantly promote the transformation of Internet business model and have a promoting effect on the transformation of elements of business model. In addition, our analysis of the economic consequences of digital inclusive finance demonstrates that it can improve the financial performance of enterprises by promoting the transformation of enterprises' Internet business model. These results indicate that digital finance primarily promotes the transformation of Internet business models through three major channels: alleviating financing constraints, reducing information asymmetry, and generating spillover effects on traditional financial service. Our findings not only verify the promoting effect of regional digital financial development on the transformation of enterprise Internet business models but also provide empirical evidence and policy implications for further innovation in financial models and more effective guidance of financial services to the real economy.