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The removal of private capital restrictions: Impacts on enterprise digital transformation

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  • Cao, Guangxu
  • Fu, Lin
  • Li, Zhengrong
  • Wang, Yilin

Abstract

This study investigates the causal impact of lifting private capital restrictions on enterprise digital transformation in China. Combining an endogenous growth framework with a multi-period Difference-in-Differences (DID) design, we demonstrate that deregulation significantly enhances firms' digital capabilities. The treatment effects exhibit marked heterogeneity: (a) firms with concentrated ownership or larger scale experience stronger impacts, and (b) coastal locations and economically advanced regions show more pronounced responses. Our contribution provides the first integrated analysis of how regulatory reforms drive enterprise technology adoption through multiple channels. The results suggest policymakers should develop differentiated implementation strategies accounting for firm characteristics and regional conditions to optimize digital transformation outcomes.

Suggested Citation

  • Cao, Guangxu & Fu, Lin & Li, Zhengrong & Wang, Yilin, 2025. "The removal of private capital restrictions: Impacts on enterprise digital transformation," Finance Research Letters, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:finlet:v:81:y:2025:i:c:s1544612325006889
    DOI: 10.1016/j.frl.2025.107428
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