IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v97y2026ics0927538x26000697.html

Digitalization of financial infrastructure and cash holdings: Evidence from China

Author

Listed:
  • Chen, Shiwen
  • Tian, Jing
  • Bai, Jun
  • Cai, Xueling

Abstract

This paper investigates the impact of financial infrastructure digitalization on corporate cash holdings, utilizing the establishment of the Shanghai Commercial Paper Exchange Corporation Ltd. (SHCPE) in China as a quasi-natural experiment. Using the difference-in-differences (DID) approach, we find that the establishment of the SHCPE leads to a significant increase in corporate cash holdings. Mechanism tests suggest that this effect is driven by the precautionary motive of future investment opportunities and the alleviation of the agency motive for cash holdings. Heterogeneity analyses further reveal that the positive effect is more pronounced for large firms and firms located in regions with a favorable local business environment. Moreover, additional tests indicate that firms' cash holdings converge toward their optimal level, contributing to enhanced firm value. Overall, our study not only provides novel evidence on the real effects of financial infrastructure digitalization, but also offers insights for promoting financial market efficiency and high-quality economic growth in emerging economies.

Suggested Citation

  • Chen, Shiwen & Tian, Jing & Bai, Jun & Cai, Xueling, 2026. "Digitalization of financial infrastructure and cash holdings: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:pacfin:v:97:y:2026:i:c:s0927538x26000697
    DOI: 10.1016/j.pacfin.2026.103123
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X26000697
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.pacfin.2026.103123?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:97:y:2026:i:c:s0927538x26000697. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.