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Digital finance and industrial structure upgrading: Evidence from Chinese counties

Author

Listed:
  • Shen, Hongshan
  • Qin, Mengyao
  • Li, Tianyi
  • Zhang, Xuan
  • Zhao, Yang

Abstract

The county-level economy holds the potential for future economic growth in China, but traditional finance faces challenges in meeting the needs of county-level economic development and industrial structure upgrading. Digital finance plays a vital role in addressing the challenges faced in county-level development. This study empirically examines the impact and underlying mechanisms of digital finance on industrial structure upgrading using panel data from 1385 counties in China from 2014 to 2020. The empirical results indicate that the development of digital finance significantly promotes industrial structure upgrading, and this finding holds even after conducting a series of robustness tests. Mechanism analysis suggests that digital finance stimulates industrial structure upgrading in the county by fostering entrepreneurial activity and promoting social consumption. Cross-sectional analysis further reveals that the impact of digital finance is more pronounced in regions with lower levels of traditional finance development and efficiency, as well as lower levels of economic development. Additionally, the influence of digital finance diminishes from central to eastern and western regions of China.

Suggested Citation

  • Shen, Hongshan & Qin, Mengyao & Li, Tianyi & Zhang, Xuan & Zhao, Yang, 2024. "Digital finance and industrial structure upgrading: Evidence from Chinese counties," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    • Handle: RePEc:eee:finana:v:95:y:2024:i:pb:s1057521924003740
    DOI: 10.1016/j.irfa.2024.103442
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    Cited by:

    1. Zijing Hu & Bowen Li & Guanyu Guo & Yuan Tian & Yue Zhang & Chengming Li, 2024. "Unlocking the Power of Economic Agglomeration: How Digital Finance Enhances Urban Land Use Efficiency Through Innovation Ability and Rationalization of Industrial Structure in China," Land, MDPI, vol. 13(11), pages 1-26, October.

    More about this item

    Keywords

    Digital finance; Industrial structure upgrading; County-level economy;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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