Digital inclusive finance harvest: Cultivating creditworthiness for small agricultural businesses

Digital inclusive finance (DIF) is progressively reshaping traditional banking through innovative technology to address global challenges. The wide range of digital products and services provided by DIF empowers enterprises, enhancing profitability and local competitiveness. This study systematically investigates the impact of DIF on firm creditworthiness, measured by red- or blacklisting in the National Enterprise Credit Information Publicity System. Using firm-level panel data from small and micro agricultural enterprises, we find that higher county-level DIF indices significantly reduce the likelihood of blacklisting while increasing red-listing. The most influential factors are credit investigations and online investment trends. Notably, firms that had previously faced unfavorable loan conditions due to factors like ownership, size, or industry benefited the most from DIF. • This study investigates the impact of digital inclusive finance on a firm’s credit ratings. • We use a firm-level panel dataset comprising many enterprises and their red-listing and blacklisting records. • The local level of credit investigations and investments online are the most motivating factors. • We found heterogeneities in the effects based on ownership, size, and industry. • The mechanisms include increased local competition and enhanced firm profitability resulting from DIF.