How Digital Finance Affects Economic Development <br/>—A Study Based on 31 Provinces in Inland China

Abstract

With the continuous development of digital technology, the rapid integration of digital technology and the financial industry will have a significant impact on China’s economic development trend and quality. Based on the fixed effect model and data from 31 Chinese provinces from 2013 to 2021, this paper investigates whether digital finance affects economic development, delves deeper into the mechanism of digital finance’s impact on economic development, and examines regional differences in development. It is discovered that digital finance has a significant positive impact on economic development, and further mechanistic analysis shows that digital finance contributes to economic development by attracting foreign direct investment and optimizing the industrial structure. Digital finance plays a different role in promoting different regions, with the greatest impact on the western region, followed by the central region, while the impact on the eastern region is unclear, particularly in low-income regions.