Abstract
With the rapid development of the digital economy, digital finance, as a financial innovation combining Internet information technology with traditional finance, plays an essential role in the financial risk of microenterprises and macroeconomic operations. In this paper, the digital financial inclusion index at the provincial level is matched with the microdata of listed companies in Shanghai and Shenzhen stock markets. And, the panel data from 2011 to 2020 are set up from the theoretical and empirical analysis of digital finance on the impact of enterprise financial risk and its mechanism. Firstly, the development of digital finance in China has significantly reduced enterprise financial risk. In order to control the endogeneity, the Bartik instrumental variable is used to select the instrumental variable. Secondly, financing constraint is the function mechanism of digital finance to reduce enterprise financial risk. Thirdly, for enterprises with low debt levels and enterprises located in the eastern region, digital finance plays a more critical role in reducing financial risk.
Highlights
Security and stability are crucial factors for maintaining sustained and high-speed economic growth
The results of the baseline regression are presented. e marginal effect of the digital finance index is 0.256, and it is significant at the level of 1%, which indicates that the development of digital finance obviously increases the Z value measuring enterprise financial risk
It has been proved that digital finance can reduce enterprise financial risk, so what is the mechanism by which digital finance affects enterprise financial risk? To reveal this mechanism, the financing constraint is selected as the mechanism variable to carry out the test according to the previous theoretical analysis
Summary
Security and stability are crucial factors for maintaining sustained and high-speed economic growth. Digital finance uses technologies such as artificial intelligence to establish a data warehouse by improving algorithms and evaluation mechanisms [14], construct a transparent and information-based credit system [15, 16], introduce innovative models or tools to enhance the efficiency of capital allocation in the financial sector [13, 17], and strengthen risk warning and management capabilities. Digital finance can reduce spatial and temporal constraint, serve the fields that are difficult to cover by traditional finance [18], alleviate the mismatch of credit resources [19], and provide support for enterprises to reduce financial risk. It is more realistic to consider the heterogeneity when studying the role of digital finance in enterprise financial risk On this basis, the following hypotheses are proposed: H1: digital finance can reduce enterprise financial risk. H3: digital finance reduces the enterprise’s financial risk by alleviating the financing constraint
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