Digital inclusive finance and Zipf’s law for firms of China: an investigation based on the full-sample data

ABSTRACT

This paper tests how digital inclusive finance affects the scale distribution of firms in China. The full-sample registration information of approximately 30 million firms in China is utilized for this investigation. The main findings suggest that, as a developing country, the scale distribution of China’s firms significantly deviates from Zipf’s law. However, digital inclusive finance helps to correct this deviation. A nonlinear test shows that the above positive effect is rising, meaning it is necessary to further develop digital inclusive finance. The impact of digital inclusive finance is better in the relatively backward central and western regions. Also, no obvious heterogeneity exists among industries, highlighting the due meaning of the word ‘inclusive’.

KEYWORDS:

• Digital inclusive finance
• Zipf’s law
• business registration information
• instrumental variables

JEL CLASSIFICATION:

• D20
• G30
• O30

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Digital inclusive finance is a kind of financial inclusion, which uses the Internet and the technology of information and communication to complete a series of financial activities, where financial inclusion is defined as the availability and equality of opportunities to access financial services (Nanda and Kaur 2016).