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One click into capital: The impact of digital government on venture capital

Author

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  • Wei, Xiaokun
  • Jiang, Yan
  • Gan, Tian
  • Zou, Honghui

Abstract

Digital transformation in public sectors has become a prominent trend in economic development and public management. This paper utilizes a difference-in-differences (DID) approach based on the Chinese digital government (DG) policy to explore the impact of DG transformation on venture capital (VC) investment. The results show that DG transformation improves the likelihood and amount of VC investment for startups. These results remain robust after accounting for potential endogeneity concerns and conducting various robust checks. Additionally, this positive effect is driven by enhanced government efficiency and increased innovation activities. Furthermore, the study finds that DG policy shortens VC investment duration, underscoring the impact on investment strategies. This study contributes to the literature by providing novel insights into the effects of public sector digitalization and its role in stimulating private capital markets.

Suggested Citation

  • Wei, Xiaokun & Jiang, Yan & Gan, Tian & Zou, Honghui, 2025. "One click into capital: The impact of digital government on venture capital," Pacific-Basin Finance Journal, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:pacfin:v:91:y:2025:i:c:s0927538x25000460
    DOI: 10.1016/j.pacfin.2025.102709
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    More about this item

    Keywords

    Digital government; Venture capital; Government efficiency; Innovation;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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