Does Fintech Development Facilitate Firm's Innovation? Evidence from China

This paper empirically investigate the impact of Fintech development on firms’ innovation and its mechanism. Using the panel data of Chinese listed firms in A-share market from 2011 to 2021 and the prefectural-level Fintech indicator constructed with the information of Fintech companies, we discover solid evidence that Fintech development facilitates firms’ innovation in terms of innovation input, innovation output and innovation efficiency. And we find that alleviating information asymmetry and easing financing constraints are the two potential channels for this effect. Furthermore, we find Fintech development has heterogeneous impacts on firms’ innovation for firms with different property rights, at different geographical locations and with different technological attributes. These results provide important policy implications as they demonstrate the crucial role of Fintech in the high-quality development of real economy