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Industry-finance cooperation and digital innovation: evidence from China’s pilot city policy

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  • Xu, Yanan
  • Feng, Zhuzhu
  • Troise, Ciro

Abstract

Key digital technologies (KDTs) are characterized by high costs, long development cycles, and considerable uncertainty, which make traditional financing insufficient. China’s industry-finance cooperation pilot city policy aims to ease these constraints and promote KDTs innovation. Using 13,580 firm-year observations on A-share firms from 2014 to 2022, we first apply double machine learning (DML) to estimate the causal effect of the industry-finance cooperation policy on KDTs innovation. The DML results show that the policy significantly increases KDTs-related patenting. Building on this, we then use time-series qualitative comparative analysis (tsQCA) to examine the underlying mechanisms and identify four configurations shaped by firm size, strategic choices, and open innovation. Our study shows how institutional reforms can stimulate high-risk digital innovation and offers insights for policy design.

Suggested Citation

  • Xu, Yanan & Feng, Zhuzhu & Troise, Ciro, 2026. "Industry-finance cooperation and digital innovation: evidence from China’s pilot city policy," Finance Research Letters, Elsevier, vol. 89(C).
    • Handle: RePEc:eee:finlet:v:89:y:2026:i:c:s154461232502481x
    DOI: 10.1016/j.frl.2025.109232
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    References listed on IDEAS

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