Research on the Impact Mechanism of Digital Finance on Total Factor Productivity of Enterprises: A Case Study of Shanghai and Shenzhen A-share Listed Companies

Abstract

The improvement of total factor productivity (TFP) of enterprises is the key to achieving high-quality economic development. Digital finance, as a new form of financial services, has a significant impact on the total factor productivity of enterprises. Therefore, this article searched for data on A-share listed companies in Shanghai and Shenzhen from 2010 to 2021, and used a fixed effects model and instrumental variable method to empirically analyze the impact and mechanism of digital finance on TFP. Research has found that: (1) digital finance and its sub dimensions (especially the degree of digitization) significantly improve enterprise TFP;(2)Digital finance has a stronger TFP promotion effect on small-scale enterprises, non-state-owned enterprises, high-tech enterprises, and enterprises in western regions; (3) Digital finance promotes TFP growth through mechanisms such as increasing research and development investment, enhancing human capital, improving resource allocation, improving information disclosure quality, strengthening risk-taking ability, and optimizing corporate governance. Based on this, this article proposes policy recommendations to promote the healthy development of digital finance and enhance the TFP of enterprises.