Digital Finance And The Preference Of Enterprise Investment Structure

In the context of supply-side structural reform advancement and China’s economic development entering the new normal,the financial return on physical investment,especially in manufacturing industry,is increasingly lower than that on virtual investment.As a result,more and more non-financial enterprises begin to deviate from their primary business and invest in virtual assets,particularly in real estate.The scale of financial assets held by non-financial enterprises is rapidly expanding,which seriously hindering the real economy.The increase of systemic financial risks and the widening gap between the rich and the poor can adversely affect the high-quality development and common prosperity realization,which has aroused great attention from the academic and political circles.Meanwhile,digital technologies such as big data,cloud computing and artificial intelligence are booming.As a financial innovation product,digital finance has brought a huge impact on financial industry.It also has created a new situation for non-financial enterprises’ investment activities.Digital finance is obviously characterized by disintermediation,transparency,universality and breakthrough boundaries of time and space.Whether it could make finance return to serve the real economy and influence enterprises’ preference of investment structure is a topic worthy discussing.Base on the above,this study selects China’s A-share non-financial listed companies as samples and empirically test the impact of digital finance on enterprises’ preference of investment structure.Besides,this study further explores two influence channels,internal and external moderators and heterogeneity characteristics.The findings are shown as follows.First,digital finance can significantly prohibit physical investment and inhibit virtual investment.Secondly,financing constraints and managerial myopia are two influence channels,that is.digital finance influences enterprises investment structure preference by alleviating financing constraints and managerial myopia.Third,this study explores whether different dimensions of digital finance have different impacts.The results indicate digital finance depth has the most obvious effect on physical investment,and digitization degree has the most obvious effect on virtual investment.Forth,from the perspective of internal and external environment,this study finds that the enterprises’ economy digitalization and the uncertainty of economic policy can negatively moderate the relationship between the two.Enterprises’ economy digitalization has substitution effect on digital finance,while uncertainty of economic policy has promotion effect on it.Fifth,further study shows that digital finance can influence enterprises investment structure preference more significantly in private and manufacturing enterprises.After replacing the explained variables,replacing regression model,excluding alternative explanations,using high-dimensional fixed effect model and propensity score matching to alleviate endogeneity,the results still remain unchanged.This article has theoretical and practical contributions.First,this study shows that digital finance can play a significant positive role in enterprises’ investment structure preference.To some extent,it is a response and solution to the question on what digital finance has brought.Second,this article enriches the relevant research on the influencing factors of enterprises’investment structure preference,indicating that digital finance could prohibit physical investment by relieving the finance constraints and managerial myopia.The government should insist on supporting the development of digital finance.Third,the sub-dimensional analysis of digital finance reveals that the digital finance depth is the main dimension to promote physical investment,and the digitalization degree is the main dimension to inhibit virtual investment.Therefore,it is necessary to focus on supporting and developing the deep use of digital finance and promoting the digital transformation of the financial sectors.Forth,this study finds that the enterprises’ economy digitalization of can also correct investment structure preference,and the stability of external economic policy environment is conducive to the positive effect of digital finance on investment structure.Therefore,it is necessary to promote the deep digital transformation of enterprises and create a stable institutional environment.Fifth,we also find that the positive impacts of digital finance on investment structure preference are more significant in private and manufacturing enterprises.That is,in enterprises with higher degree of information asymmetry,and in industry with lower return rate,the effect of digital finance is more prominent.This study supplements and enriches the research on the relationship between digital finance and enterprises’ investment behavior in theory.In practice,it inspires the government to supervise and guide the development of digital finance,promote the digital transformation of enterprises and financial institutions,and create a stable institutional environment.Enterprises should actively cultivate their own digital capabilities,and better focus on their primary business with the help of the inclusive effect caused by digital finance.