Digital Finance,Factor Mismatch And Regional Economic Development

In recent years,the vigorous development of digital finance has broken through the limitations of traditional financial services in terms of narrow geography,high threshold and small customer volume,and guided the flow of financial resources to key areas and weak links of economic development such as infrastructure,small and medium-sized enterprises and " three rural areas".Digital finance has expanded the breadth and depth of financial services and played a significant role in accelerating the flow of capital and labor,promoting a more rational allocation of factors,continuous optimization and upgrading of industrial structure,supporting economic development and promoting regional economic growth.For the first time,the Communist Party of China’s Nineteenth National Congress proposed the phrase "high-quality development" of the economy,calling for a change from high-speed growth to high-quality development.Around 2018,a lot of academics started to investigate how digital finance directs economic development,although few of them did it simultaneously.The primary social contradictions that still exist in our nation today are undeveloped and uneven.During the 14th Five-Year Plan period,China has gradually entered the era of digital economy,and whether the development of digital finance can alleviate the factor mismatch problem and thus promote economic growth has become an important issue.Based on the existing literature,this thesis analyses the unbalanced effect of economic development,financial exclusion and threshold effect,as well as the theory of inclusive economic growth under the development of digital finance,and takes the mismatch between capital and labour as the entry point to explore the role of digital finance on regional economic development.This thesis selects annual panel data of 279 cities in China from 2011-2018,uses the second phase data of the Digital Inclusive Finance Index released by Peking University as an indicator to measure the level of digital finance development,innovatively constructs city-level measures of capital mismatch and labour mismatch,and then uses a two-way fixed-effects model,a mediating-effects model and a moderating-effects model to investigate the impact of digital finance under factor mismatch on economic development.Based on the theoretical analysis and empirical research,the thesis draws the following conclusions.Firstly,digital finance can promote regional economic growth,and factor mismatch plays a negative mediating role in it,that is,the development of digital finance can help alleviate capital mismatch and labour mismatch and thus promote regional economic development.Second,there is regional heterogeneity in the effects of both digital finance and factor mismatch on economic development.The positive effect of digital finance on economic development is more pronounced in the east and central regions and in third-tier cities and below.Alleviating labour mismatch in the western region is more conducive to promoting regional economic development,while alleviating capital mismatch in the central region and third-tier cities and below can promote economic development in the region.Third,factor mismatches in different digital finance development environments have different boosting effects on the local economy.Under the scenario of slower digital financial development,a low level of capital mismatch or labour mismatch is conducive to economic growth;under the scenario of higher level of digital financial development,the oversupply of capital or labour is conducive to economic growth.According to the findings,this thesis proposes that we should now vigorously promote the construction of digital finance infrastructure,absorb and train professional talents,improve and strengthen the regulation of digital finance,optimise the allocation of factor resources according to local conditions,transform the economic development model,promote the transformation and upgrading of industrial structure,and narrow the gap in regional economic development.so as to promote regional economic growth.