Can Fintech mitigate business risks?--Evidence from the Chinese market

Abstract

Fintech is an important supplement to the traditional financial system, and its development is a good medicine to alleviate the financing constraints and business risks of enterprises. Based on the data of listed enterprises from 2004 to 2021, this paper adopts the method of panel linear regression to explore the impact of the level of Fintech development on the operating difficulties of local enterprises. The results show that increasing the level of Fintech development can effectively reduce the business risks faced by enterprises, and the conclusion still holds after a series of robustness tests such as adding control variables, replacing explanatory variables, multiple fixed effects, and changing the time interval. The mechanism analysis shows that the level of Fintech will affect the business risk of enterprises by changing the book-to-market ratio, and the heterogeneity analysis shows that the impact of Fintech on the business risk of private enterprises as well as non-Big 4 audited enterprises is more significant. The policy implication of this paper is that the government should actively guide, support and regulate the development of Fintech in different regions to provide policy support and guarantee for enterprises to reduce their business risks. However, attention should also be paid to balancing the relationship between innovation and risk management, data security and privacy protection to ensure the sustainable development of Fintech.