Fintech and the IPO: Evidence from China

Abstract

IPOs are of great significance to the development of firms, but many firms go extinct some time after conducting an IPO, which seriously hinders the long-term development of firms. Based on the data of Chinese A-share listed firms from 2005-2021, this paper investigates the relationship between fintech development and firms' survival time after IPO using a panel fixed effects model and a mediating effects model, and applies a double difference model to test the endogeneity problem. The study finds that the development of fintech can extend the time to survival after IPO by alleviating financing constraints, reducing transaction costs and accelerating the development of financial inclusion. And this impact is heterogeneous, meaning that the effect is more pronounced in the eastern China, where the level of economic development is higher. Therefore, in the context of national policies to support the development of enterprises, the level of financial technology development in the country should be improved according to local conditions to extend the survival time of enterprises after IPO, which is conducive to the long-term development of enterprises.