The Impact of Digital Inclusive Finance on Corporate Innovation Output: Theoretical Mechanism and Empirical Test

Abstract

This paper matches the data of Shanghai and Shenzhen A-share listed companies from 2011 to 2022 with the Peking University Prefecture-level Digital Inclusive Finance Index to investigate the impact of digital inclusive finance on corporate innovation output. Two-way fixed effects estimation shows that the development of digital inclusive finance significantly increases corporate invention patent applications and total patent applications. Mechanism tests show that digital inclusive finance is significantly correlated with the decline of financing constraints, while stronger financing constraints significantly inhibit corporate invention patent output, indicating that improved financing conditions are an important channel through which digital inclusive finance affects corporate innovation. Grouping results show that the promoting effect mainly appears in non-state-owned enterprises, non-private enterprises, cities with higher initial digital finance foundation and eastern regions. After replacing innovation indicators, performing winsorization, using the one-period lagged core explanatory variable and excluding financial industry samples, the main conclusions remain stable. The study indicates that digital inclusive finance can support corporate innovation by improving information identification and financing availability, but its effect depends on regional digital infrastructure and corporate financing structure.