How can digital finance boost enterprises' high-quality development?: evidence from China.

As a new industry derived from the traditional financial system and enhanced by emerging technologies, digital finance is significant in microenterprise development. Based on the 2011-2018 Digital Inclusive Finance Index of Peking University, we examine the mechanism-inventory optimization and incremental innovation. We use the data of small and medium-sized enterprises to reveal the effect of digital finance-mismatch correction and defect improvement. The study results show that digital financing significantly improves enterprises' high-quality development. Further research has revealed that digital finance can effectively correct scale, attribute, phase, and industry mismatches. Digital finance alleviates financing constraints, solves the expensive financing problem, and pushes enterprises to deleverage in the economic development process. However, digital finance is still limited for companies with high financing constraints and leverage. Moreover, financial regulation can significantly improve the economic performance of digital finance. The findings provide reliable empirical evidence and policy inspiration for promoting digital finance development, deepening the supply-side structural reform of finance, better serving the real economy, and achieving high-quality economic development.