Fintech development and corporate credit risk: Evidence from an emerging market

Abstract

This paper analyzes the impact of fintech development on the credit risk of non-financial firms. Using the city-level fintech development index constructed based on data from Ant Finance Service Group, we find that: (1) non-financial firms in cities with better fintech services have lower credit risk; (2) two channels identified are financial constraints and corporate investment efficiency; (3) the role of fintech development in reducing corporate credit risk are more pronounced for non-state-owned firms, small and medium-sized firms, firms in regions with a lower level of marketization, and firms experiencing economic contraction. Our research provides implications for the development of fintech in an emerging market.