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Digital Finance and Firm Exit: Mathematical Model and Empirical Evidence from Industrial Firms

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Listed:
  • Fenfen Ma
  • Linxing Lei
  • Ziyang Chen
  • Mancang Wang
  • Ahmed Farouk

Abstract

From the perspective of financial constraint, this paper constructs a mathematical model to analyze the impact of digital financial development on firm exit probability. The relationship between digital finance and firm exit was tested empirically based on the industrial firm data in 2011–2013. The results show that digital financial development significantly suppresses firm exit probability. Mechanism analysis suggests that digital financial development can ease the information asymmetry of the credit market, facilitate the credit acquisition of firms, and alleviate the constraint on corporate financing, thereby reducing the probability of firm exit. This paper provides the theoretical basis and empirical evidence for controlling firm exit from the angle of digital finance development.

Suggested Citation

  • Fenfen Ma & Linxing Lei & Ziyang Chen & Mancang Wang & Ahmed Farouk, 2021. "Digital Finance and Firm Exit: Mathematical Model and Empirical Evidence from Industrial Firms," Discrete Dynamics in Nature and Society, Hindawi, vol. 2021, pages 1-7, July.
    • Handle: RePEc:hin:jnddns:4879029
    DOI: 10.1155/2021/4879029
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    Cited by:

    1. Kun Ma & Xuehui Xia & Lijun Liu, 2023. "Digital Finance and Advanced Manufacturing Industry Development in China: A Coupling Coordination Analysis," Sustainability, MDPI, vol. 15(2), pages 1-13, January.
    2. Chen, Ximing & Yan, Yongjia & Qiu, Ji, 2024. "Can enterprise digital transformation reduce the reliance on bank credit? Evidence from China," Economic Modelling, Elsevier, vol. 132(C).
    3. Zhou, Xiaoxiao & Zhao, Yongan & Zhao, Xin & Xu, Junwei & Smutka, Luboš & Bilan, Yuriy, 2024. "Mineral resource drivers in the global south: A case study of Australia," Resources Policy, Elsevier, vol. 92(C).

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