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Flexible fintech regulation and corporate digital innovation: Evidence from a quasi-natural experiment

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  • Wu, Haomin
  • Yang, Yuting
  • Wang, Jiani

Abstract

The rapid proliferation of fintech has disrupted the traditional balance between financial efficiency and stability, prompting regulators worldwide to adopt more adaptive oversight approaches. Adopting a flexible-regulation perspective, this study exploits the Pilot Project of Regulation on Fintech Innovation (PPRFI) as a quasi-natural experiment to examine how flexible fintech regulation affects corporate digital innovation. Based on a sample of Chinese A-share listed firms from 2018 to 2023, we find that PPRFI significantly increases both the quantity and quality of corporate digital innovation. Mechanism analysis further reveals that PPRFI primarily improves corporate digital innovation by facilitating corporate financing and enhancing information transparency. Cross-sectional analysis indicates that the positive effects of this flexible regulation are more pronounced in firms subject to severe financing constraints and high agency costs, and in those operating in high-technology, highly competitive industries. Moreover, we find that the impact of PPRFI is more prominent in regions with a better fintech environment and more advanced digital finance. Overall, our study sheds light on the positive role of flexible fintech regulation in promoting digital innovation.

Suggested Citation

  • Wu, Haomin & Yang, Yuting & Wang, Jiani, 2026. "Flexible fintech regulation and corporate digital innovation: Evidence from a quasi-natural experiment," Research in International Business and Finance, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:riibaf:v:82:y:2026:i:c:s0275531925005185
    DOI: 10.1016/j.ribaf.2025.103262
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    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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