Fintech and corporate debt default risk: Influencing mechanisms and heterogeneity

Abstract

With its new financial service mode, fintech affects the internal and external environment of enterprise development and may reduce the risk of enterprise debt default by easing financing constraints. Using data from Chinese A-share listed companies during 2011–2020, this study examines the influencing channels and impact of fintech on corporate debt default risk. Empirical research shows that the development of fintech can significantly reduce the risk of corporate debt default. A series of robustness tests, such as using the instrumental variable method to reduce endogeneity, adding macro control variables, lagging explained variables for one period, shortening the time interval, and changing corporate debt default risk measurement indicators, show that the above conclusions are still valid. Further, studies on the intermediary effect show that fintech development can reduce the risk of corporate debt default by easing corporate financing constraints. Additionally, heterogeneity analysis shows that for high-tech enterprises with few investment opportunities, fintech significantly reduces the risk of corporate debt default. This study found that with the support of industrial policies, the risk of corporate debt default is reduced and the influence of fintech on the risk of corporate debt default is more significant in the industries supported by industrial policies than those not supported by industrial policies. This study adds to extant literature on the economic effects of fintech development and the factors influencing default risk, provides a theoretical basis for how fintech can better serve and promote the high-quality development of the real economy, and provides policy reference for government departments to prevent inherent risks in economic operations.