The Impact of Commercial Banks' Interest Rate Policies on SME Innovation under Digital Inclusive Finance

Abstract

Digital inclusive finance, as a new financial service model, promotes small and medium-sized enterprise innovation by providing easier financing through various technological means. The government's regulatory policies and commercial banks' interest rate policies have an impact on their financing services, thus affecting SME innovation. In addition, relevant studies are less concerned with the role of commercial banks' interest rates in SME innovation. In order to examine the effects of commercial banks' lending rates, government regulation, and SMEs' innovation benefits and costs on the evolutionary game, we build a three-party evolutionary game model of commercial banks, government, and small and medium-sized enterprises in a digital inclusive finance environment. It is found that commercial banks and the government agree on an appropriate interest rate policy to help SMEs innovate while protecting their interests. To control SME innovation, the government must play a significant role in the regulation of digital inclusive finance; commercial banks should lower the loan interest rate ceiling to support SME innovation; and SMEs should strengthen themselves to obtain high-quality loans so that they can better innovate.