IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v12y2024i1p2390943.html
   My bibliography  Save this article

Regional digital finance and inefficient corporate investments: Empirical evidence from China

Author

Listed:
  • Asad Nisar
  • Haolin Li
  • Syed Sadaqat Ali Shah
  • Rabia Rafique

Abstract

Using data of 1,457 Chinese A-share listed enterprises from 2012 to 2021, this study investigates the impact of regional digital finance development on inefficient corporate investments. Data for core explanatory variables, including Digital Finance and Breadth, were obtained from the Peking University Digital Finance Research Center, while firm-level variables’ data were sourced from CSMAR. The baseline results show that regional digital finance development significantly reduces inefficient corporate investments in China. These findings are further supported by a series of robustness tests. Additionally, we identify two mechanisms through which regional digital finance development mitigates inefficient corporate investments: alleviating financing constraints and increasing cash flow circulation. The mitigation effects of digital finance are more pronounced in state-owned firms, firms with strong governance, firms located in western regions, firms in areas with a high degree of marketization, and firms in innovative and competitive industries. Overall, this study offers significant insights for developing countries, suggesting that regional digital finance development can enhance firms’ resource allocation efficiency.By analyzing data of Chinese A-share listed firms over 2012-2021, the study discovers that digital finance alleviates financing constraints and enhances cash flow circulation, thereby optimizing resource allocation. This research highlights the strategic role of digital finance in fostering more efficient investment decisions, with broader implications for economic development and policy-making in developing countries.

Suggested Citation

  • Asad Nisar & Haolin Li & Syed Sadaqat Ali Shah & Rabia Rafique, 2024. "Regional digital finance and inefficient corporate investments: Empirical evidence from China," Cogent Economics & Finance, Taylor & Francis Journals, vol. 12(1), pages 2390943-239, December.
  • Handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2390943
    DOI: 10.1080/23322039.2024.2390943
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2024.2390943
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/23322039.2024.2390943?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2390943. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.