Opportunity or Challenge? Research on the Influence of Digital Finance on Digital Transformation of Agribusiness

Abstract

The rapid development of digital finance in China has subtly influenced many aspects of social and economic development. However, agricultural enterprises can hardly enjoy the same digital dividend as traditional enterprises because of special attributes such as internal and external resource constraints, environmental constraints and cyclicality. To clarify the relationship between digital finance and digital transformation of agribusiness, and also to explore the factors that influence the effectiveness of digital finance, we use the “Peking University Digital Finance Index” to evaluate the micro impact of digital finance on the digital transformation of agribusiness. The results show that there is a “transition period” in which digital finance contributes to the digital transformation of agribusinesses, i.e., the two show a U-shaped non-linear relationship. This effect still exists after considering endogeneity and a series of robustness tests. In addition, further research determined that financing constraints and financial risk are the key paths through which digital finance affects the digital transformation of agribusinesses. Effective financial regulation weakens the U-shaped relationship between digital finance and agribusiness digital transformation and is an important means of attenuating the negative impact of digital finance. Overall, we provide a micro explanation for the accelerated popularization of digital finance in emerging markets, which is urgently needed for most agribusinesses seeking high-quality development.