BusinessHumanities and Social Sciences Communications

Digital financial development and inefficient investment: a study based on the dual perspectives of resource and governance effects

L. Xue, J. Dong, et al.

This empirical study by Liuyang Xue, Junan Dong, and Shiyao Jiang reveals how digital finance plays a crucial role in reducing inefficient investments in Chinese non-financial firms. Notably, it shows that this impact is especially significant in non-state firms and regions with robust institutional frameworks. Explore how digital finance not only minimizes wasteful expenditures but also enhances overall investment levels!... show more

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Abstract

As one of the most crucial domains within the digital economy, digital finance has garnered significant attention due to its impact on firms. This study empirically examines the influence of digital finance on inefficient investment, using a sample of Chinese non-financial firms from 2011 to 2019. Results show that digital finance effectively mitigates firm inefficient investment, with a more pronounced effect observed in non-state firms and those operating in regions with higher levels of institutional development. Mechanism analysis demonstrates that digital finance mitigates inefficient investment through resource and governance effects. Further analysis shows that the breadth of coverage, use depth, and digital support services of digital finance all contribute to reducing inefficient investment. Moreover, digital finance enhances the willingness and ability of firms to invest and improves their overall investment levels. These results provide evidence for the positive impact of digital finance in mitigating inefficient investment.

Publisher

Humanities and Social Sciences Communications

Published On

Jan 01, 2024

Authors

Liuyang Xue, Junan Dong, Shiyao Jiang

DOI

https://doi.org/10.1057/s41599-023-02411-5

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