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The impact of digital finance on the quality of industrial development: evidence from Chinese cities

Author

Listed:
  • Minlou Liu
  • Xu Huang
  • Yutian Shen
  • Hao Wang

Abstract

Drawing upon panel data collected from 278 Chinese prefecture-level cities during 2011–2021, we examine how digital finance correlates with industrial development quality. The study explores theoretical mechanisms through which digital finance influences the quality of industrial development, leading to three key discoveries. First, the improvement in digital finance significantly promotes industrial development quality – a result that holds after addressing issues such as endogeneity, exogenous shocks, measurement errors, and model misspecification. Moreover, the multifaceted impact of digital finance on enhancing quality is demonstrated through comprehensive market coverage, utilization intensity, and digitalization levels, all of which drive superior developmental outcomes. Second, our investigative findings reveal that digital finance predominantly elevates the quality of industrial growth by strengthening both regional entrepreneurial activities and technological advancement capabilities. Third, further research reveals that digital finance has inclusive characteristics promoting industrial development across different regions, while stronger financial regulation enhances the positive effect of digital finance on industrial development quality.

Suggested Citation

  • Minlou Liu & Xu Huang & Yutian Shen & Hao Wang, 2026. "The impact of digital finance on the quality of industrial development: evidence from Chinese cities," Applied Economics, Taylor & Francis Journals, vol. 58(35), pages 7167-7182, July.
    • Handle: RePEc:taf:applec:v:58:y:2026:i:35:p:7167-7182
    DOI: 10.1080/00036846.2025.2556037
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