Digital Finance,Bank Competition,and Innovation Outputs Of Small And Medium-sized Enterprises

In the context of China’s strong support for the high-quality development of "specialized,refined,distinctive,and new" small and medium-sized enterprises(SMEs),how to use digital finance to enhance the innovation output of SMEs in China has become a growing concern in both society and academia.Previous research has mainly focused on listed companies as a whole,with less direct research on SMEs.Therefore,this article conducts a separate study on SMEs as a dynamic group.In addition,this article further explores the inherent mechanism of how digital finance promotes SMEs’ innovation output from the perspective of bank competition,with the aim of expanding research on the relationship between digital finance and SMEs’ innovation output from a theoretical level.Based on this,this article uses the small and medium-sized board and GEM(Growth Enterprise Market)listed companies from 2014 to 2020 as samples to establish an unbalanced panel model.Firstly,it examines the direct effect of digital finance on SMEs’ innovation output.Secondly,it uses the mediation effect method proposed by Wen Zhonglin(2004)to examine the mediating effect of bank competition on the relationship between digital finance and SMEs’ innovation output.Finally,through further analysis,this article conducts a grouping test based on property rights,industry properties,and location properties to further investigate the differences in the impact of digital finance,bank competition,and SMEs’ innovation output under different contextual factors.The main conclusions are as follows:Firstly,the development of urban digital finance significantly improves the level of SMEs’ innovation output,which remains true even after considering endogeneity issues and conducting robustness tests.Secondly,the development of digital finance can improve the degree of bank competition,forcing banks to transform and upgrade,and better provide financial support for SMEs’ innovation activities.Thirdly,the depth and breadth of digital finance have a positive promoting effect on SMEs’ innovation output,with the depth effect being more significant,while the level of digitization has an insignificant effect on SMEs’ innovation incentives.Finally,the incentive effect of digital finance has heterogeneity,with non-state-owned small and medium-sized enterprises,non-manufacturing small and medium-sized enterprises,and SMEs in the eastern region having more significant promotion effects.