Fintech Development and Firm Technological Innovation Efficiency: Empirical Findings in China

As a new combination of finance and technology, fintech not only makes people's daily life more convenient but also brings new opportunities for firm growth. Yet, although multiple parties in society have benefited tremendously from the development of fintech, its actual impact on FTIE remains...

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Bibliographic Details
Published in:IEEE transactions on engineering management 2024, Vol.71, p.3881-3891
Main Authors: Xu, Yong, Yuan, Ling, Lee, Hyoungsuk, Baire, Sabrine, Nakonieczny, Joanna, Zhao, Xin
Format: Article
Language:English
Subjects:
Bank technology
Business
Companies
Empirical analysis
Financial risk
fintech
Impact analysis
Industries
innovation efficiency
Innovations
Investment
Regression models
Regulation of financial institutions
Research and development
Robustness (mathematics)
Technological change
Technological innovation
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Summary:As a new combination of finance and technology, fintech not only makes people's daily life more convenient but also brings new opportunities for firm growth. Yet, although multiple parties in society have benefited tremendously from the development of fintech, its actual impact on FTIE remains unclear. For this purpose, we adopted a two-way fixed-effect model and considered the data of A-share-listed companies from 2011 to 2019 to analyze the impact of fintech development on FTIE in China and its associated mechanism. We found that fintech development negatively affected FTIE by increasing business risks and debt pressures through risk transmission and regulatory arbitrage, respectively. This finding remains robust after using instrumental variable tests and adopting Poisson and Tobin regression models. Furthermore, such negative impacts are higher for firms in the eastern region, nonmanufacturing firms, and state-owned enterprises. Our findings contribute significantly to the literature on technological innovation and financial regulation by shedding light on the negative impacts of the dominating fintech development on FTIE.
ISSN:0018-9391
1558-0040
DOI:10.1109/TEM.2023.3239499