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The effects of FinTech development on corporate employment

Author

Listed:
  • Shi, Xin
  • Zhou, Yuwen

Abstract

Using a region-level FinTech index calculated from account-level data provided by Ant Finance Service Group, we examine how FinTech development affects corporate employment. Drawing on a sample of 3277 non-financial A-share listed companies in China from 2011 to 2019, we find that firms with tighter financial constraints hire significantly more employees in cities with more developed FinTech services, which is consistent with the economic mechanism whereby FinTech alleviates financing constraints. Further analysis reveals that FinTech development intensifies bank loan competition, enabling financially constrained firms to gain greater access to credit. Additionally, FinTech development reduces under-investment (under-hiring) in employees caused by labor-related financing needs. At the city level, FinTech development has a significant positive impact on local employment, indicating that it also has aggregate effects. Overall, our findings suggest that FinTech can mitigate the distortive effects of credit market imperfections on the labor market, thereby helping to alleviate unemployment issues.

Suggested Citation

  • Shi, Xin & Zhou, Yuwen, 2025. "The effects of FinTech development on corporate employment," International Review of Economics & Finance, Elsevier, vol. 101(C).
    • Handle: RePEc:eee:reveco:v:101:y:2025:i:c:s1059056025003351
    DOI: 10.1016/j.iref.2025.104172
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    More about this item

    Keywords

    FinTech development; Employment; Financial constraints; Bank competition;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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