The Impact of Digital Finance on Commercial Credit Financing: An Analysis of Firm Heterogeneity

The Impact of Digital Finance on Commercial Credit Financing: An Analysis of Firm Heterogeneity

7. Extension Analysis

(1) Analysis based on Firm Heterogeneity:

1. Corporate Governance Capability:

Higher corporate governance capability leads to more rational management decision-making, reduces management's incentive for private gain, improves information disclosure quality, and conveys positive signals of good business operations to external parties. This enhances the trust of commercial credit providers and facilitates commercial credit financing for private enterprises. Conversely, lower corporate governance levels increase the management's incentive for private gain, resulting in increased information asymmetry and opacity. However, digital finance can effectively reduce information asymmetry and improve transparency through technological means, gaining the trust of commercial credit providers. Therefore, the promotion effect of digital finance on commercial credit financing for private enterprises is more significant when corporate governance levels are lower. Following the approach of Feng (2017)[53], this study selects seven indicators:

• Proportion of the largest shareholder* Board chairman and CEO duality* Management ownership ratio* Independent director ratio* Board size* Board supervisor size* Proportion of the top ten shareholders

These are used to conduct principal component analysis and generate a composite indicator to measure corporate governance levels. The sample is then divided into two groups based on the median, assigning a value of 1 if corporate governance levels are higher than the median and 0 otherwise. The regression results in Table 9, columns (1) and (2), show that the impact of digital finance on commercial credit financing for private enterprises is significant in the group with weaker corporate governance levels but has no substantial effect in the group with higher corporate governance levels.

2. Credit Scale:

The promotion effect of digital finance on private enterprise financing varies across different credit scale enterprises. Firstly, enterprises with larger credit scales often have more financing needs and more complex financing structures. Digital finance can decrease information asymmetry, widen financing channels, meet enterprise financing needs, and optimize financing structures. Secondly, larger-scale enterprises face greater operational risks, and digital finance can utilize big data and artificial intelligence technologies to assess and monitor credit risks in real-time, helping enterprises manage risks more effectively and obtain commercial credit financing. Therefore, the promotion effect of digital finance on commercial credit financing for private enterprises is mainly observed in enterprises with larger credit scales. Following the approach of Li et al. (2022)[23], this study measures the credit scale using the proportion of bank loans to current business income (CS) and divides the sample into two groups based on the median, assigning a value of 1 if the credit scale is higher than the median and 0 otherwise. The results in Table 9, columns (3) and (4), show that the impact of digital finance development on commercial credit financing for private enterprises mainly exists in the group with larger credit scales, while it has no significant effect on smaller-scale private enterprises.

3. Financing Constraints:

Looking at the relationship between enterprises and the development of digital finance, the most direct correlation is the degree of financing constraints. Enterprises with greater financing constraints tend to use commercial credit for financing to meet various needs, such as production and operations. According to the main hypothesis, the development of digital finance reduces information asymmetry, thereby promoting commercial credit financing for private enterprises. Therefore, it can be expected that the promotion effect of digital finance on commercial credit financing for private enterprises is more significant in enterprises with weaker financing capabilities. Following the approach of Kaplan & Zingales (1997)[54], this study uses the KZ index to measure the degree of financing constraints. A higher KZ index indicates greater financing constraints and weaker financing capabilities. The sample is divided based on the median, assigning a value of 1 if the KZ index is higher than the median and 0 otherwise. The regression results in Table 9, columns (5) and (6), demonstrate that the development of digital finance has a substantial effect on promoting commercial credit financing in enterprises with weaker financing capabilities.