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Does Digital Finance Move Together With Technology Innovation In China?

Author

Listed:
  • Zhu Wenhui

    (Chang’an University, China)

  • Zhang Jiajieth

    (Chang’an University, China)

  • Hu Chuanxia

    (Chang’an University, China)

  • Dong Hanwei

    (Chang’an University, China)

Abstract

Existing academic research has predominantly examined the unidirectional impact of digital finance on technological innovation, thereby neglecting the reciprocal interplay between these two domains. This study fills this gap by investigating the long-term bidirectional cointegrated relationship between digital finance and technological innovation. Using panel cointegration estimation methods on panel data from 286 Chinese cities during 2011–2020, empirical results reveal a long-term co-movement between digital finance and technological innovation. Pooled Mean Group estimation demonstrates that digital finance makes significant contributions to technological innovation in both long-term and short-term contexts. However, sub-sample analyses show that digital finance consistently boosts technological innovation in cities with high financial development, but its impact is short-term in cities with low financial development. These findings provide crucial insights for policymakers to formulate targeted measures that foster the synergistic development of digital finance and technological innovation.

Suggested Citation

  • Zhu Wenhui & Zhang Jiajieth & Hu Chuanxia & Dong Hanwei, 2025. "Does Digital Finance Move Together With Technology Innovation In China?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 28(2), pages 313-330, July.
    • Handle: RePEc:idn:journl:v:28:y:2025:i:2g:p:313-330
    DOI: https://doi.org/10.59091/2460-9196.2567
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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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