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The Development of Fintech and SME Innovation: Empirical Evidence from China

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  • Hongyu Li

    (Business School, Ningbo University, Ningbo 315211, China)

  • Zhiqiang Lu

    (Business School, Ningbo University, Ningbo 315211, China)

  • Qili Yin

    (Audit Department, Liaoning Technical University, Fuxin 123008, China)

Abstract

Innovation is the source of competitiveness among firms and the driver of economic growth. This paper examines the influence of fintech and firms’ innovation from the perspective of stakeholder financial support. To test the relationship, we collect data from Chinese small and medium-sized enterprises (SMEs) between 2011 and 2017. The results indicate that there is a strong positive effect of fintech development on firms’ innovative activities. This effect operates through fintech’s role in reducing information asymmetry: it increases the availability of funding support from stakeholders for firm R&D investment. Further, the funding supports are not only from investors and banks, but also from other stakeholders. In addition, this effect is larger for bigger and more opaque firms. These findings connect fintech with firm innovation and illuminate the unique roles and mechanisms of fintech development in promoting innovation inputs and outcomes.

Suggested Citation

  • Hongyu Li & Zhiqiang Lu & Qili Yin, 2023. "The Development of Fintech and SME Innovation: Empirical Evidence from China," Sustainability, MDPI, vol. 15(3), pages 1-14, January.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:3:p:2541-:d:1052614
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    References listed on IDEAS

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    3. Ying Chu & Shujun Ye & Hongchang Li & Jack Strauss & Chen Zhao, 2023. "Can Digitalization Foster Sustainable Financial Inclusion? Opportunities for Both Banks and Vulnerable Groups," Sustainability, MDPI, vol. 15(8), pages 1-21, April.
    4. Wang, Xiaoran & Ibrahim, Haslindar, 2024. "Unveiling the effects of mineral markets, fintech and governance on business performance: Evidence from China," Resources Policy, Elsevier, vol. 91(C).

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