Can digital finance improve corporate performance? Evidence from China

This paper applies panel data of listed companies in China between 2011 and 2021, combined with city-level digital finance indices, to examine the impact of regional digital finance development on local corporate performance. The results clearly indicate that regional digital finance development significantly enhances local corporate performance. Specifically, digital finance mitigates financial constraints, increases the proportion of liquid assets and curtails earnings management, thereby further increasing corporate performance. This promotional effect is particularly pronounced among small and micro-sized companies, non-state-owned enterprise, and companies with weak bank-corporate relationships. This study supplements research on the economic consequences of digital finance development and the influencing factors of company performance, providing a theoretical basis and empirical evidence for the high-quality development of the real economy facilitated by digital finance advancements.