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Fintech Pilot Programs and Digital Innovation: Evidence from Quasi-Natural Experiments in China

Author

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  • Xiaolin Yu

    (Yonsei University)

  • Jin Seo Cho

    (Yonsei University)

Abstract

The current study examines whether government-led digital finance initiatives promote firm-level digital innovation by leveraging the staggered rollout of China’s Fintech pilot programs as quasi-natural experiments. Our dataset comprises 26,746 firm-year observations of A-share listed companies from 2009 to 2023. To measure innovation, we develop a text-based indicator derived from the frequency of digital-related keywords in the annual reports of the listed firms. Employing a multi-period difference-in-differences design, we find that designation as a pilot zone increases digital innovation intensity by 0.8225 per thousand report words. These results remain robust across parallel, propensity score matching, placebo, and robustness tests. Mediation analysis reveals that the part of the effect is attributable to increased R&D intensity, with the program raising the average R&D-to-sales ratio by 0.24 percentage points. Moreover, program effect is stronger among high-tech firms and those located in Central and Western China, regions characterized by relatively weaker financial and digital infrastructure.

Suggested Citation

  • Xiaolin Yu & Jin Seo Cho, 2025. "Fintech Pilot Programs and Digital Innovation: Evidence from Quasi-Natural Experiments in China," Working papers 2025rwp-257, Yonsei University, Yonsei Economics Research Institute.
    • Handle: RePEc:yon:wpaper:2025rwp-257
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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - 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
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P42 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Productive Enterprises; Factor and Product Markets; Prices

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