Research On The Influence Of Digital Finance On Financing Constraints

Small and medium-sized enterprises(SMEs)are an important part of China’s market economy.According to the Ministry of Industry and Information Technology,by the end of 2022,there were over 30 million SMEs registered with the industrial and commercial sector in China,and it is estimated that over 70% of patents in China belong to these enterprises.Despite their large number and wide distribution,SMEs often find it difficult to obtain funding supply in the process of funding credit with financial institutions due to the low availability of information and poor credit rating as their own strength is relatively weak compared to that of listed companies,thus creating the problem of SME financing constraints.Digital finance,as the main direction of China’s current financial industry reform,has received widespread attention from all sectors of the industry upon its introduction.Digital finance has greatly alleviated the problems of low coverage of traditional financial services and information asymmetry with advanced financial technology,and has effectively facilitated the financing of various social groups,especially remote areas and small and micro enterprises.With the continued development of digital finance,it has brought light to SMEs caught in the dilemma of financing constraints.This paper puts forward hypotheses on the relationship between competition and financing constraints in the banking industry based on the theory of information asymmetry,the theory of market power and the theory of non-linear relationships,and on the relationship between corporate financing structure and financing constraints based on the theory of information transmission and the theory of transaction costs.Based on the financial licensing information of the CBRC,this paper measures the banking industry competition indicators,based on which the financial data of 589 SMEs listed on the SME board in China from 2011-2018 are used to empirically examine how the impact of digital finance on SMEs’ financing constraints works through the channel of banking industry competition;at the same time,this paper also focuses on how the internal financing The paper also analyses how the internal financing structure of firms affects the financing constraints of firms.The hypotheses are tested by building a two-way fixed effects model and introducing mediating,moderating and instrumental variables.Further empirical analysis shows that:(1)overall,digital finance does alleviate SMEs’ financing constraints;(2)the development of digital finance promotes the banking industry to develop financial technology and transform its business development model,and the competition for new markets will intensify the level of competition in the banking industry,thus facilitating SMEs’ financing;(3)the development of digital finance increases SMEs’ access to financing.The improved position of SMEs in the lending process will promote increased low-cost debt financing for businesses.Digital finance alleviates the financing constraints of enterprises by changing their financing structure.(4)The impact of digital finance on state-owned enterprises is lower than that of non-state-owned enterprises,as state-owned enterprises also receive favourable bank lending options in the traditional financial market due to their larger asset size;whereas the digital infrastructure in economically developed regions is well equipped and residents are more receptive to digital finance,digital finance has a greater effect on alleviating the financing constraints of SMEs in economically developed regions.