Digital Inclusive Finance, Financing Constraints, and Technological Innovation of SMEs—Differences in the Effects of Financial Regulation and Government Subsidies

Deepening the development of digital inclusive finance, dredging the impact of digital inclusive finance on the innovation path of small and medium-sized enterprises (SMEs), and strengthening financial supervision and government support are of great significance to promoting the technological innovation of SMEs. This paper selects listed companies on the New Third Board as research samples and analyzes and empirically tests the relationship between digital inclusive financial and technological innovation of small and medium-sized enterprises. The results show that digital inclusive finance can significantly promote the technological innovation level of SMEs, especially the higher the degree of digitalization, the more obvious the promotion effect. Upon further testing, it was more pronounced in the sample of high-tech industries and eastern SMEs. Digital inclusive finance can effectively alleviate the financing constraints of SMEs, thereby promoting the technological innovation of SMEs. Reasonable financial supervision and adaptive government subsidies have a positive regulating effect on the innovation incentive effect of digital inclusive finance.

The power of technology: FinTech and corporate debt default risk in China

With the economic downward pressure increasing and the COVID-19 spreading, avoiding the corporate debt default risk is a basic requirement for achieving high-quality economic development in China. Can FinTech empower traditional finance and contribute to the healthy development? We explore the impact of FinTech on corporate debt default risk. The findings suggest that FinTech reduces the corporate debt default risk. And the impact is more pronounced in non-SOEs and in firms with small-scale and in the growth and maturity stages. Further analysis shows that financial supervision plays a role in strengthening the negative impact of FinTech on the corporate debt default risk. Therefore, FinTech development should be actively promoted and corresponding regulatory measures should be formulated, then the finance can better serve the real economy and achieve high-quality development in China. © 2023 Elsevier B.V.

The impact of sudden public events and fiscal policy relief on the financing constraints of small and medium enterprises: a quasi-natural experiment during COVID-19

Using data on Chinese GEM-listed companies from the first quarter of 2018 to the second quarter of 2022, we examine the impact of COVID-19 on SMEs' financing constraints and the moderating effect of fiscal and tax incentives using the difference-in-differences method (DID). The results indicate that the COVID-19 shock severely affected SMEs' financing constraints, and this effect is more pronounced among firms in industries particularly sensitive to COVID-19, such as transportation, catering, accommodation, culture, and entertainment. A further analysis shows that tax incentives and fiscal subsidies have differing moderating effects, with the former alleviating SMEs' financing constraints and the latter having only a relatively limited effect. This finding provides direct micro-level evidence for understanding the impact of COVID-19 on financing constraints and provides insights for promoting the optimization of fiscal support policies for SMEs. © 2023 Informa UK Limited, trading as Taylor & Francis Group.

The effect of diversification on company value during a global health crisis: evidence from the COVID-19 pandemic

PurposeThe authors study the valuation effect of corporate diversification in the initial phase of the COVID-19 pandemic in 2020 in Europe.Design/methodology/approachApplying a cross-sectional regression model to a sample of public companies headquartered in the European Union, the authors investigate the existence of and the change in a diversification discount between 2018 and 2020. By applying the Excess Q methodology, the authors make an industry adjustment of diversified companies to measure the value effect of corporate diversification.FindingsThe authors find an economically and statistically significant diversification discount that increases from an average Excess Q of -0.05 in 2019 to -0.10 in 2020. The diversified companies' inferior fundamental financial performance in 2020 accompanies the discount. The results deviate from those of previous research, which mostly show a decrease in the diversification discount in economic crises, and thereby, shed doubt on whether diversification provides insurance against pandemic-induced adverse value effects.Originality/valueThe study distinguishes the role of corporate diversification during recessionary periods by establishing that the valuation effect of diversification depends on the nature of the crisis. The analysis incorporates criticism of previous studies concerning a biased methodology and uniform data source by applying the Excess Q methodology and using FactSet industry segment data.

Financing Constraints and Firm's Productivity Under the COVID-19 Epidemic Shock: Evidence of A-Shared Chinese Companies.

Focusing on the financing barriers to firm productivity improvement under the influence of external shocks, we empirically analyze the data of A-share listed companies from 2007-2018 to determine the impact of financing constraints on total factor productivity (TFP) in the context of COVID-19 pandemic and the paths of factor use efficiency and R&D innovation efficiency on this impact using ordinary least-squares (OLS) method. We find that financing constraints are an important factor inhibiting the TFP of firms. This inhibitory effect is more serious in small-scale firms, non-state firms, and non-energy firms. Further investigation shows that the inhibitory effect of financing constraints on firms' TFP is more pronounced when firms are located in the Yangtze River Delta city cluster, the Pearl River Delta city cluster, non-port cities, and provincial capitals. The mechanism test finds that improving the efficiency of capital use and labor use can alleviate the suppressive effect of financing constraints on TFP. The alleviating impact is more significant when capital use efficiency is improved. However, increasing the efficiency of R&D innovation further strengthens the inhibitory effect of financing constraints, and this effect is more pronounced under positive external shocks.

Nous nous concentrons sur les obstacles liés au financement qui entravent l'amélioration de la productivité des entreprises lorsqu'il y a des chocs externes, et nous analysons de façon empirique l'impact des contraintes de financement sur la productivité globale des facteurs des entreprises dans le contexte de la COVID-19, ainsi que les voies permettant l'efficacité d'utilisation des facteurs et l'efficacité de l'innovation en R&D sur cet impact. Pour ce faire, nous utilisons la méthode des moindres carrés ordinaires en nous basant sur les données de sociétés cotées en bourse de 2007 à 2018. Nous constatons que les contraintes de financement représentent un facteur important qui inhibe la productivité globale des facteurs des entreprises. Cet effet inhibiteur est plus prononcé au sein des petites entreprises, des entreprises non gouvernementales et des entreprises non énergétiques. Une autre étude révèle que l'effet inhibiteur des contraintes de financement sur la productivité globale des facteurs des entreprises est plus prononcé lorsque les entreprises sont situées dans le groupe de villes du delta du fleuve Yangtze, dans le groupe de villes du delta de la rivière des Perles, dans les villes non portuaires et dans les capitales provinciales. Le test du mécanisme révèle que l'amélioration de l'efficacité de l'utilisation du capital et de la main-d'œuvre des entreprises peut atténuer l'effet suppressif des contraintes de financement sur la productivité globale des facteurs. L'impact d'atténuation est plus important lorsque l'efficacité d'utilisation du capital est améliorée. Cependant, l'augmentation de l'efficacité de l'innovation en R&D renforce encore l'effet inhibiteur des contraintes de financement, et il est plus prononcé en cas de chocs externes positifs.

How Can the Financing Constraints of SMEs Be Eased in China?-Effect Analysis, Heterogeneity Test and Mechanism Identification Based on Digital Inclusive Finance

Due to the impact of COVID-19 and other factors, SMEs are increasingly facing the contradiction of financing constraints. In order to explore feasible ways to ease the financing constraints of SMEs, we further incorporate digital inclusive finance into the analytical framework of financing constraints of SMEs, and test the causal relationship between them by using models such as two-way fixed effects model and moderated intermediary effect model. We find that digital inclusive finance can effectively alleviate financing constraints of SMEs, and this phenomenon is particularly significant in private enterprises and family enterprises. In addition, the mitigation effect of digital financial inclusion is more like icing on the cake, and it cannot provide practical assistance to small and medium-sized enterprises with poor business conditions. Further research also finds that commercial credit seems to be an effective channel for digital financial inclusion to alleviate financing constraints of SMEs, but corporate leverage also plays an important role in this process, playing a negative moderating role. In general, our study strengthens the effectiveness of digital inclusive finance in alleviating financing constraints of SMEs, at the same time, confirming the existence of commercial credit channels and the moderating effect of enterprises’ lever ratio and providing a feasible direction for alleviating financing constraints of enterprises. Copyright © 2022 Li, Wei and Guo.

The Effect of the Supply Chain Finance on Trading Enterprises and the Promotion of Financial Information System

COVID-19 has a significant impact on the global supply chain, and enterprises involved in international trade may face more uncertainties. Financing constraints restrict the development of trading enterprises, while supply chain finance can help trading enterprises obtain more funds and reduce the risks in trade. This paper uses the data of trading enterprises from 2011 to 2020 and adopts cash-cash flow sensitivity model to study the relationship between supply chain finance and enterprise financing constraints. The results show that supply chain finance can significantly alleviate the financing constraints and reduce the cash-cash flow sensitivity of trading enterprises. In addition, this paper also puts forward suggestions from aspects of the government, financial markets and enterprises to promote the application of the information system of supply chain finance in international trade. © 2021 IEEE.

COVID-19's Impact on China's Strategic Emerging Industries: An Observation of Policy Difficulties.

The study investigates the influence of the COVID-19 on the rate of R&D investment and foreign exchange development of China's most important emerging industry firms. From 2010 to 2020, data were collected from 26 locations across China, focusing on seven different types of critical creating companies. To analyze the data, we have applied Fourier Increased Unit Root Test, Granger causality assessments test, Pattern Assessment test, Poisson pseudo most excellent probability (PPML) approach, Wald test, and Regression analysis test. The results of the tests reveal a clear underlying association among COVID-19 relates Chinese exports and imports. COVID-19's instant effects on imports and exports lack working capital have been calculated, but the short-term, medium-to-long-term products are composite and unidentified. The article result main results are following: (i) The COVID-19 impacts the R&D investment is main industries like as high-end equipment industry, new materials industry, and new-era data innovation. (ii) The COVID-19 highly affects the imports and exports development network of Chinese strategic emerging industries which emphasizes cross-industry grouping features. The study provides the guidance to the future researchers to focus on COVID-19 affects on the strategic emerging industries of developed and underdeveloped countries to determine of foreign direct investment inflow and unemployment growth rates. JEL: G20, O10, O40.

Impact of Monetary Policy Uncertainty on R&D Investment Smoothing Behavior of Pharmaceutical Manufacturing Enterprises: Empirical Research Based on a Threshold Regression Model.

R&D investment is the source of technological innovation of pharmaceutical enterprises, but it will be restricted by the funding level, especially in the context of major public health emergencies occurring more frequently, therefore exploring the impact of monetary policy uncertainty on the R&D investment smoothing behavior of pharmaceutical manufacturing enterprises has important theoretical and practical value. Based on the relevant data of Chinese pharmaceutical manufacturing enterprises from 2012 to 2018, this paper studies the impact of monetary policy uncertainty on R&D investment smoothing behavior of pharmaceutical enterprises, and investigates whether there is a threshold effect. First, our results demonstrate that the empirical test results of this article support the hypothesis of R&D investment smoothing behavior of pharmaceutical manufacturing enterprises. Second, there is a negative correlation between monetary policy uncertainty and R&D investment smoothing behavior, and the shorter the period is, the higher the financing constraints of pharmaceutical enterprises are, and the more obvious the negative correlation is. Third, financing constraints have a single threshold effect on the R&D investment smoothing behavior of pharmaceutical manufacturing enterprises, with a threshold of -13.7693. Moreover, this conclusion can better promote the virtuous circle of the real economy of financial and pharmaceutical manufacturing enterprises. It is recommended that pharmaceutical manufacturing enterprises establish and improve the enterprise R&D reserve system, reduce the risk of R&D investment, play the role of R&D smoothing, and realize the sustainable development of enterprise R&D.

Is cash the panacea of the COVID-19 pandemic: Evidence from corporate performance.

This study investigates the impact of COVID-19 crisis on corporate investment and financing policies. Using a difference-in-difference approach, I find while firms suffer from a real negative shock from the pandemic on average, firms with an abundant cash reserve prior to the crisis outperform firms without. Consistent with the precautionary motive behind corporate cash holdings, this paper demonstrates the effect of cash holdings is meaningful to mitigate adverse effect of the aggregate market. My finding also highlights the difficulty in estimating the optimal cash level when rare market condition is considered.