Internet finance and corporate investment: Evidence from China

Existing literature focuses on how to realize inclusive finance and confirms the positive relationship between internet finance and inclusive finance. Few studies investigate the impact of internet finance on non-financial groups that are not the target of inclusive finance. Thus, this study examines the impact of internet finance development on the investment of listed firms in China during 2011–2018. We find that city-level internet finance, especially the use depth of internet finance, significantly increases corporate investment. Results remain robust after we address endogeneity and conduct several robustness checks. Heterogeneity analysis suggests that the above effect is pronounced for large firms, state-owned firms, and firms in consumer industries. Moreover, we validate the demand-driven channel and find that internet finance promotes household consumption and firm performance. Ultimately, we unveil a positive relationship between internet finance and firm value.