Advances in Management and Applied Economics

Digital Financial Development, Diversification of Financial Services Participation and Entrepreneurial Choices for Residents

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• Abstract

   

  Along with the popularity of the mobile Internet and the development of digital technology, financial institutions have shown a digital development trend, and digital finance (Internet lending) has become a new channel for entrepreneurial financing. In view of this, based on CHFS 2019 data, this paper includes traditional finance and digital finance in the same analysis framework, and from two dimensions: single participation and compound participation, the study finds that: (1) Both single and compound participation forms can have a significant positive impact on residents' entrepreneurial choices, and relatively speaking, the compound participation form has a more significant promotion effect than the single participation form; (2) Among the single forms of participation, Internet lending has the lowest promotion effect and its role is still to be explored, while private lending has the highest promotion effect, which indicates that private lending is still the main financing channel for entrepreneurs; (3) Among the compound forms of participation, the compound financial participation mode without bank lending has the lowest promotion effect, which indicates that bank lending is extremely important to residents' entrepreneurial choices. Further, the heterogeneity analysis reveals that financial services participation has a more significant facilitating effect on entrepreneurial choices made by low-endowment households, both in terms of single participation and composite participation. In summary, this paper argues that the role of formal finance should be strengthened, the development of informal finance should be guided, and the inclusive role of digital finance should be further explored through the construction of digital infrastructure and the improvement of residents' financial literacy.

   

  JEL classification numbers: D80, L10, O14.

  Keywords: Digitalisation of financial institutions, Financial services participation, Digital finance, Internet lending, Entrepreneurial activity.