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Impact of Fintech on labor allocation efficiency in firms: Empirical evidence from China

Author

Listed:
  • Ang, James
  • Yan, Zhenli
  • Xiao, Tusheng
  • Yuan, Chun
  • Wang, Jingfang

Abstract

Fintech has significantly influenced the traditional financial industry by introducing advanced technologies and innovative business models that have resulted in profound impacts. This study examines the effects of Fintech development on labor allocation efficiency and explores its underlying mechanisms. Using a set of Chinese A-share public firms from 2011 to 2020, we find that Fintech development plays a positive role in labor allocation efficiency, mainly by mitigating labor overinvestment. This positive effect is further reinforced by market competition. We also find that the primary pathways of this enhancement include lowering information asymmetry, mitigating agency issues, and substituting low-skilled labor. Moreover, we show that the dimensions of depth and digital integration are particularly important in improving labor allocation efficiency.

Suggested Citation

  • Ang, James & Yan, Zhenli & Xiao, Tusheng & Yuan, Chun & Wang, Jingfang, 2024. "Impact of Fintech on labor allocation efficiency in firms: Empirical evidence from China," Global Finance Journal, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:glofin:v:62:y:2024:i:c:s1044028324000838
    DOI: 10.1016/j.gfj.2024.101011
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    Keywords

    Fintech; Labor allocation efficiency; Information asymmetry; Agency problem; Labor substitution;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O35 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Social Innovation
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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