The impact of digital financial inclusion on innovation in small and medium-sized enterprises

Abstract

Small and medium-sized enterprises (SMEs)account for 95.68% of China's enterprise households and are important contributors to national development. The introduction of more policies aimed at the development of SMEs has demonstrated the importance of SMEs in terms of policy and strategy. Enterprise innovation is an extremely important part of enterprise development, but compared with medium and large enterprises, SMEs are vulnerable to financial constraints due to their single product, insufficient guarantees, and unbalanced allocation of external financial resources, resulting in a lack of funds to invest in enterprise innovation, which makes it difficult for them to realize their own development. Digital financial inclusion (DFI) is an emerging financial model based on new technology, DFI can improve those financial individuals and groups that are constrained in traditional finance. DFI can make it easier for people and businesses to access financial services through digital technology. In this paper, we use the DFI index of Peking University from 2011 to 2020, as well as the enterprise data of CSMAR to data analyze the impact of DFI on SMEs' innovation. The paper first uses a fixed-effects model for this purpose, and then takes financing cost as a mediating variable to analyze the channels of influence. The regression results show that DFI has an important role in promoting SME innovation, and that DFI can promote SMEs innovation by reducing the cost of financing.