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Quantity or quality: Novel insights into the impact of digital finance on innovation

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Listed:
  • Zhu, Xiaoke
  • Wu, Hanqi
  • Deng, Qiyun

Abstract

Despite prior literature shedding light on the role of digital finance in enhancing innovation quantity, research on whether and how it influences innovation quality remains limited. To address this gap, this study investigates the causal relationship between digital finance and the innovation performance of manufacturing enterprises, and identifies the inclusive effects of digital finance in China. We provide compelling evidence that digital finance generates significantly positive effects on innovation performance, encompassing both quantity and quality dimensions. Mechanism analyses demonstrate that financial constraints serve as a potential channel through which digital finance operates. We also observe the inclusive effects of digital finance on innovation performance. Specifically, the innovation improvements induced by digital finance are more pronounced for small and medium-sized enterprises (SMEs) and state-owned enterprises (SOEs).

Suggested Citation

  • Zhu, Xiaoke & Wu, Hanqi & Deng, Qiyun, 2024. "Quantity or quality: Novel insights into the impact of digital finance on innovation," Finance Research Letters, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:finlet:v:65:y:2024:i:c:s1544612324006330
    DOI: 10.1016/j.frl.2024.105603
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    More about this item

    Keywords

    Digital finance; Inclusive effects; High-quality innovation; Financial constraints; Manufacturing sector;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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