Digital Finance and High-quality Entrepreneurship: Evidence from China
TIAN Ge, HUANG Hai, ZHANG Xun
School of Economics, Capital University of Economics and Business; Faculty of Applied Economics, University of Chinese Academy of Social Sciences; School of Statistics, Beijing Normal University and Institute of Digital Finance, Peking University
Summary:
Promoting high-quality entrepreneurship is important to Chinese-style modernization. Finance is the blood of the real economy. Therefore, giving full play to the role of digital technology in financial services and accelerating the development of digital finance will help to improve the quality of entrepreneurship. Unfortunately, the literature lacks studies on the relationship between digital finance and high-quality entrepreneurship. This paper is committed to studying how digital finance affects high-quality entrepreneurship, which is important for promoting the deep integration of the digital economy and the real economy, high-quality entrepreneurship, and Chinese-style modernization. This paper theoretically and empirically analyzes how digital finance influences entrepreneurship, especially high-quality entrepreneurship, and further explores the external conditions necessary to guarantee that digital finance will promote high-quality entrepreneurship. First, from the theoretical perspective, this paper analyzes the impact of digital finance on entrepreneurship, especially high-quality entrepreneurship, and puts forward the research hypotheses about the mechanism through which digital finance affects high-quality entrepreneurship. Then, from the empirical perspective, this paper combines the index of digital financial inclusion with the China Family Panel Studies (CFPS) and analyzes the impact of digital finance on entrepreneurship, especially high-quality entrepreneurship, based on the definition of high-quality entrepreneurship. To strengthen the robustness of the conclusion, this paper also uses the instrumental variable method to carry out endogenous analysis. Further, based on the connotation of the payment business and credit business, this paper comprehensively analyzes the mechanism through which digital finance promotes high-quality entrepreneurship using the subsample regression method or interaction model. Finally, this paper discusses the external conditions for high-quality entrepreneurship from the perspective of government support policies. This paper finds that digital finance not only promotes entrepreneurship but also contributes to high-quality entrepreneurship in China. As for the mechanism through which digital finance promotes high-quality entrepreneurship, the direct factor through which the payment business promotes high-quality entrepreneurship is the digitalization of consumption. The direct factor through which the credit business promotes high-quality entrepreneurship is supplementing and supporting traditional financing and thus easing the constraints of traditional credit. In addition, for entrepreneurial enterprises, the development of the payment business and credit business has increased the demand for highly skilled talent, promoted technological progress, and realized the effective integration of capital, talent, and technology, thus promoting high-quality entrepreneurship. Therefore, the increasing demand for highly skilled talent and technological progress is the deep factor through which digital finance promotes high-quality entrepreneurship. This paper has important policy implications. First, we should continue to promote the development of digital finance to drive high-quality entrepreneurship. Second, to promote the digitalization of consumption and ease the constraints of traditional credit, it is necessary to optimize the network and power infrastructure, support the development of direct finance, and reduce enterprises' tax burden. Finally, to increase the demand for highly skilled talent and promote technological progress, we need to increase investment in science and education. These external conditions not only help to promote high-quality entrepreneurship but also contribute to high-quality economic development and the realization of Chinese-style modernization. The innovations of this paper are as follows. First, as for the theoretical contribution, this paper defines high-quality entrepreneurship from the perspectives of business effect, entrepreneurship sustainability, entrepreneurs' ability, and the innovation level of the industries, which lays a theoretical foundation for the study of the role of digital finance in promoting high-quality entrepreneurship. Second, as for the empirical contribution, by considering the endogenous problems in detail, this paper deeply studies how digital finance affects high-quality entrepreneurship from the perspectives of the payment business and credit business, and analyzes why digital finance promotes high-quality entrepreneurship by analyzing the relationships between capital, technology, and talent. Finally, as for the policy implications, this paper not only discusses how digital finance promotes high-quality entrepreneurship, but also studies the external conditions needed for this, which makes the findings more meaningful for policymakers.
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