Research on the impact of digital financial inclu-sion on entrepreneurial activity in cities

Xiaopeng Lin

doi:10.63313/EBM.9007

Authors

Xiaopeng Lin School of Business, Nanjing University of Information Science and Technology, Nanjing 210044, China Author

DOI:

https://doi.org/10.63313/EBM.9007

Keywords:

Digital financial inclusion, urban entrepreneurial activity, regional heterogeneity

Abstract

Digital inclusive finance and digital innovation have become the key drivers of high-quality economic development. Using panel data from prefecture-level cities in China from 2011 to 2021, a fixed-effect model was constructed to investigate the impact of digital inclusive finance on urban entrepreneurial activity. The study shows that digital inclusive finance can significantly promote entrepreneurial activity in cities. After a series of robustness tests, the conclusion remains robust. Heterogeneity research found that there are differences in the degree of digital inclusive finance's effect on entrepreneurial activity in cities at different administrative levels. Digital inclusive finance has a stronger driving effect on entrepreneurial activity in non-provincial capitals, while it is not significant in provincial capital regions. Therefore, we should continue to promote the development of digital inclusive finance, promote the implementation of digital innovation strategies from multiple parties, form a pattern of coordinated and linked regional development, and promote continuous economic growth.

References

[1] Schumpeter J A, Opie R. The theory of economic development: an inquiry into profits, cap-ital, credit, interest, and the business cycle[M]. Harvard University Press, 1934.

[2] Song C, Park K M, Kim Y. Socio-cultural factors explaining technology-based entrepreneur-ial activity: Direct and indirect role of social security[J]. Technology in society, 2020, 61: 101246.

[3] Ajide F M. Infrastructure and entrepreneurship: Evidence from Africa[J]. Journal of De-velopmental Entrepreneurship, 2020, 25(03): 2050015.

[4] Kim P H, Li M. Injecting demand through spillovers: Foreign direct investment, domestic socio-political conditions, and host-country entrepreneurial activity[J]. Journal of Business Venturing, 2014, 29(2): 210-231.

[5] Kerr W R, Nanda R. Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship[J]. Journal of Financial Economics, 2009, 94(1): 124-149.

[6] De Vita L, Mari M, Poggesi S. Women entrepreneurs in and from developing countries: Ev-idences from the literature[J]. European Management Journal, 2014, 32(3): 451-460.

[7] Levine R, Rubinstein Y. Smart and illicit: who becomes an entrepreneur and do they earn more?[J]. The Quarterly journal of economics, 2017, 132(2): 963-1018.

[8] Fritsch M. The theory of economic development–An inquiry into profits, capital, credit, interest, and the business cycle[J]. 2017.

[9] Audretsch D B, Heger D, Veith T. Infrastructure and entrepreneurship[J]. Small Business Economics, 2015, 44: 219-230.

[10] Rigotti L, Ryan M, Vaithianathan R. Optimism and firm formation[J]. Economic Theory, 2011, 46: 1-38.

[11] Djankov S, Qian Y, Roland G, et al. Who are China's entrepreneurs?[J]. American Economic Review, 2006, 96(2): 348-352.

[12] Madanoglu M, Memili E, De Massis A. Home-based family firms, spousal ownership and business exit: a transaction cost perspective[J]. Small business economics, 2020, 54(4): 991-1006.

[13] Buera F J. A dynamic model of entrepreneurship with borrowing constraints: theory and evidence[J]. Annals of finance, 2009, 5: 443-464.

[14] Buera F J, Kaboski J P. The rise of the service economy[J]. American Economic Review, 2012, 102(6): 2540-2569.

[15] Klapper L, Amit R, Guillén M F, et al. Entrepreneurship and firm formation across coun-tries[M]. Washington, DC: World Bank, 2007.

[16] Ozili P K. Impact of digital finance on financial inclusion and stability[J]. Borsa istanbul re-view, 2018, 18(4): 329-340.

[17] Puffer S M, McCarthy D J, Boisot M. Entrepreneurship in Russia and China: The impact of formal institutional voids[J]. Entrepreneurship theory and practice, 2010, 34(3): 441-467.

[18] Bruhn M. A tale of two species: Revisiting the effect of registration reform on informal business owners in Mexico[J]. Journal of Development Economics, 2013, 103: 275-283.

[19] Glaeser E L, Kerr W R. Local industrial conditions and entrepreneurship: how much of the spatial distribution can we explain?[J]. Journal of Economics & Management Strategy, 2009, 18(3): 623-663.