Enhancing economic resilience through digital innovation: the role of financial inclusion and infrastructure in urban China

Abstract

The digital revolution has redefined financial inclusion, significantly enhancing the capacity of urban economies to withstand and recover from economic shocks. Using panel data from 285 Chinese cities between 2011 and 2020, this study examines the role of digital innovation in promoting economic Resilience, drawing on econometric models and Martin and Sunley’s conceptual framework of Resilience. Our findings reveal that the Digital Innovation Framework (DIF) enhances economic Resilience by driving financial inclusion, technological adoption, and infrastructure development. However, regional disparities persist, with the eastern and central regions benefiting more than the western and southern regions, which have lower economic scales. The quality of corporate operations and the stability of financial markets further amplify the positive effects of digital finance on Resilience. Mediating factors, including the adoption of digital technologies and household expenditure levels, significantly strengthen the impact of DIF on urban Resilience. This study highlights the dual role of digital finance as both a catalyst for innovation and a tool for promoting equitable economic growth. The findings underscore the importance of region-specific policies in bridging development gaps, particularly in less developed areas. Policymakers are encouraged to promote inclusive digital strategies that foster fairer growth while leveraging the transformative potential of DIF.