Digital Financial Development, Financial Service Participation and Residents' Entrepreneurship

Abstract

Abstract This paper analyses the impact of different forms of financial participation on residents' entrepreneurial choices by defining different forms of lending based on CHFS 2019 data. The study finds that: (1) Both single and compound forms of participation can have a significant positive impact on residents' entrepreneurial choices, with the compound form of participation having a relatively higher boosting effect than the single form of participation; (2) Among the single forms of participation, internet loans have the smallest promotion effect, indicating that the role of digital finance is still to be explored, while private loans have the largest promotion effect; (3) Among the composite forms of participation, the form without bank loans has the lowest facilitation effect, indicating that bank loans are highly important for residents' choice of entrepreneurship; (4) Heterogeneity analysis reveals that financial services participation has a more significant contribution to entrepreneurial activity among low endowment households, both in single and composite forms of participation. This paper argues that the supporting role of formal finance should be strengthened, the development of informal finance should be reasonably guided, and the financial literacy of households should be further enhanced to bring into play the inclusive role of digital finance. JEL classification numbers: H20, H30, H81. Keywords: Digitization of financial institutions; Financial services participation; Digital finance; Internet lending; Entrepreneurial activity.