Digital finance and corporate risk-taking: evidence from China

In the context of digital finance and efforts to foster high-quality economic growth through the development of a financial powerhouse, understanding how digital finance affects corporate risk-taking holds both theoretical and practical significance. This paper investigates the relationship between digital finance and corporate risk-taking, utilizing data from A-share listed companies in China spanning 2011 to 2021, and delves into the underlying mechanisms. The results reveal that digital finance significantly boosts corporate risk-taking. Specifically, this effect is achieved through mitigating financial risk, expanding investment opportunities, and curbing controlling shareholders' equity pledges. Moreover, the impact of digital finance on corporate risk-taking is more pronounced in non-state-owned enterprises and under conditions of looser monetary policy. These findings contribute to the literature on the micro-level effects of digital finance and highlight its role in advancing high-quality financial development and enhancing financial services for the real economy.