How digital finance affects the financial asset allocation of brick-and-mortar businesses

Figures & data

Table 1. Definition of variables.

Type	Name	Definition
Endogenous variables	Fin1	Ratio of liquid financial assets at the end of the period to total assets at the end of the period
	Fin2	Ratio of illiquid financial assets at the end of the period to total assets at the end of the period
	Fin3	Ratio of financial assets at the end of the period to total assets at the end of the period
Exogenous variables	Dig_index	Digital financial index, obtained from the Index of Digital Financial Inclusion (IDFI) (2021) published by the Institute of Digital Finance of Peking University
Control variables	Fin_lg	Degree of financial assets allocation in the previous period; financial assets at the beginning of the period divided by total assets at the beginning of the period
	Size	Company size; natural logarithm of total assets at the end of the period
	Lev	Leverage ratio; total liabilities at the end of the period divided by total assets
	Roa	Return on assets; net income after tax at the end of the period divided by total assets at the end of the period
	Growth	Growth, annual growth rate of operating income
	Capint	Capital intensity, net fixed assets at the end of the period divided by total assets at the end of the period
	Big1	Percentage of shares held by the largest shareholder; number of shares held by the largest shareholder divided by total number of shares
	Mshare	Percentage of shares held by executives; number of shares held by executives divided by total number of shares
	Mb	Book-to-market ratio; the ratio of book value at the end of the period to market value
	Soe	Nature of ownership, state-owned firms score a 1, otherwise it is a 0

Source: Author's Source.

Table 2. Results of descriptive statistics.

variables	N	Mean	Sd	Min	Med	Max
Fin1	19538	0.014	0.016	0.000	0.002	0.374
Fin2	19538	0.035	0.066	0.000	0.012	0.549
Fin3	19538	0.049	0.079	0.000	0.012	0.549
Dig_index	19538	5.435	0.543	3.479	5.590	6.068
Dig_bread	19538	5.341	0.587	2.916	5.497	5.984
Dig_depth	19538	5.465	0.508	3.640	5.582	6.192
Dig_degree	19538	5.589	0.684	2.754	5.800	6.117
Size	19538	22.096	1.258	19.822	21.923	26.002
Lev	19538	0.412	0.205	0.050	0.402	0.914
Roa	19538	0.041	0.068	−0.271	0.040	0.217
Growth	19538	0.309	0.740	−0.721	0.131	5.087
Capint	19538	0.214	0.156	0.003	0.182	0.697
Big1	19538	0.344	0.147	0.088	0.323	0.742
Mshare	19538	0.154	0.208	0.000	0.016	0.693
Mb	19538	0.947	0.977	0.086	0.632	5.800
Soe	19538	0.313	0.464	0.000	0.000	1.000

Notes: This table presents summary statistics for the variables. We tabulate the number of observations (N), the sample average (mean), the standard deviation (sd), the minimum (min), the median (median), and the maximum (max). All continuous variables are winsorized at the 1% and 99% levels. See Table 1 for all variable definitions. Source: Author's Source.

Table 3. Regression results of digital finance and firms’ financial asset allocation.

variables	(1)	(2)	(3)	(4)	(5)	(6)
	Fin1	Fin2	Fin3	Fin1	Fin2	Fin3
Dig_index	−0.001**	0.033***	0.032***	−0.002**	0.010***	0.007**
	(−2.488)	(7.026)	(11.274)	(−2.111)	(3.687)	(2.482)
Fin_lg				0.845***	0.024***	0.877***
				(64.390)	(4.258)	(43.149)
Size				−0.001	0.001***	−0.000
				(−1.548)	(2.837)	(−0.945)
Lev				−0.026***	−0.004***	−0.007**
				(−10.148)	(−3.282)	(−2.417)
Roa				0.003	−0.001	−0.030**
				(0.391)	(−0.373)	(−2.548)
Growth				−0.002***	−0.000***	−0.002***
				(−3.158)	(−2.600)	(−2.978)
Capint				−0.025***	−0.004***	−0.015***
				(−10.979)	(−3.580)	(−5.558)
Big1				0.003	0.001	−0.006**
				(1.004)	(0.525)	(−2.044)
Mshare				0.000	−0.003***	−0.002
				(0.070)	(−3.291)	(−0.940)
Mb				0.001*	−0.000	0.000
				(1.806)	(−1.075)	(0.675)
Soe				0.000	−0.001***	0.001
				(0.011)	(−3.390)	(0.568)
Constant	−0.115***	−0.000	−0.141***	0.003	0.003	−0.024
	(−10.221)	(−0.103)	(−7.323)	(0.229)	(0.490)	(−1.607)
Year&Id	Control	Control	Control	Control	Control	Control
N	19538	19538	19538	19538	19538	19538
R2	0.128	0.106	0.111	0.618	0.723	0.619

Notes: Columns (1)–(3) report the univariate regression results of digital finance and corporate financial asset allocation. Columns (4)–(6) report the multiple regression results of digital finance and corporate financial asset allocation. See Table 1 for the variable definitions. All continuous variables are winsorized at the 1% and 99% levels. The t-statistics are calculated based on robust standard errors clustered by the firm and are reported in parentheses. ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively. Source: Author's Source.

Table 4. Treatment of endogeneity problems.

variables	First stage	Second stage	Second stage	Second stage
	(1)	(2)	(3)	(4)
	Dig_index	Fin1	Fin2	Fin3
Distance	−0.107***
	(−66.370)
Dig_index		−0.001***	0.024***	0.029***
		(−3.507)	(3.620)	(4.354)
Fin_lg	0.051***	0.029***	0.877***	0.843***
	(5.197)	(4.669)	(43.095)	(60.884)
Size	0.011***	0.001***	−0.002***	−0.002***
	(12.481)	(3.675)	(−2.893)	(−3.069)
Lev	−0.040***	−0.005***	−0.003	−0.021***
	(−8.283)	(−4.967)	(−1.193)	(−8.120)
Roa	−0.055***	−0.002	−0.020*	0.004
	(−4.576)	(−0.465)	(−1.844)	(0.540)
Growth	0.002**	−0.000***	−0.002***	−0.002***
	(2.092)	(−2.639)	(−3.213)	(−3.421)
Capint	−0.078***	−0.005***	−0.012***	−0.022***
	(−14.359)	(−5.935)	(−4.788)	(−8.899)
Big1	0.034***	−0.002*	−0.003	0.004
	(6.289)	(−1.802)	(−1.061)	(1.482)
Mshare	0.041***	−0.004***	−0.004	−0.002
	(9.975)	(−3.493)	(−1.448)	(−0.745)
Mb	−0.009***	0.000	0.001	0.001**
	(−7.050)	(0.360)	(0.937)	(2.363)
Soe	−0.007***	−0.002***	0.003***	0.002**
	(−3.334)	(−4.807)	(2.604)	(2.292)
Constant	4.569***	−0.016*	−0.058***	−0.090***
	(216.929)	(−1.847)	(−2.690)	(−3.235)
Year&Id	Control	Control	Control	Control
N	19538	19538	19538	19538
R2	0.920	0.629	0709	0.600

Notes: Column (1) reports the first-stage regression results for instrumental variables. Columns (2)–(4) report the second-stage regression results for instrumental variables. Columns (5)–(7) report the regression results after including the control variables. See Table 1 for the variable definitions. All continuous variables are winsorized at the 1% and 99% levels. The t-statistics are calculated based on robust standard errors clustered by firms and are reported in parentheses. ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively. Source: Author's Source.

Table 5. Regression results of changing the method to measure key variables.

variables	(1)	(2)	(3)
	Fin1	Fin2	Fin3
Dig_index	−0.002**	0.009***	0.009***
	(−2.033)	(3.318)	(3.378)
Fin_lg	0.024***	0.878***	0.845***
	(4.266)	(43.269)	(64.434)
Size	0.001***	−0.000	−0.001
	(2.808)	(−0.852)	(−1.533)
Lev	−0.004***	−0.008**	−0.026***
	(−3.291)	(−2.557)	(−10.182)
Roa	−0.001	−0.030**	0.003
	(−0.394)	(−2.527)	(0.394)
Growth	−0.000**	−0.002***	−0.002***
	(−2.480)	(−3.017)	(−3.193)
Capint	−0.004***	−0.015***	−0.025***
	(−3.634)	(−5.403)	(−10.773)
Big1	0.000	−0.006**	0.002
	(0.484)	(−1.998)	(0.975)
Mshare	−0.003***	−0.002	−0.000
	(−3.265)	(−0.956)	(−0.067)
Mb	−0.000	0.000	0.001*
	(−1.040)	(0.614)	(1.832)
Soe	−0.001***	0.001	−0.000
	(−3.348)	(0.462)	(−0.039)
Constant	0.002	−0.021	−0.010
	(0.313)	(−1.441)	(−0.643)
Year&Id	Control	Control	Control
N	19538	19538	19538
R2	0.617	0.723	0.619

Notes: Columns (1)–(3) report the regression results with municipal-level digital financial index as the explained variable. See Table 1 for the variable definitions. All continuous variables are winsorized at the 1% and 99% levels. The t-statistics are calculated based on robust standard errors clustered by the firm and are reported in parentheses. ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively. Source: Author's Source.

Table 6. Test results of the causal pathways of financing constraints.

variables	(1)	(2)	(3)	(4)	(5)	(6)
	Fin1	SA	Fin1	Fin1	KZ	Fin1
KZ						0.011**
						(2.332)
SA			0.011*
			(1.851)
Dig_index	−0.002**	−0.036**	−0.001**	−0.002**	−0.040***	−0.001**
	(−2.235)	(−2.379)	(−2.213)	(−2.206)	(−2.655)	(−2.200)
Fin_lg	0.010***	−0.375***	0.010***	0.008***	−0.385***	0.008***
	(4.563)	(−11.915)	(4.545)	(4.588)	(−11.715)	(4.528)
Size	0.000***	0.008***	0.000***	0.000***	0.005*	0.000***
	(4.491)	(3.193)	(4.548)	(3.954)	(1.907)	(3.962)
Lev	−0.002***	−0.147***	−0.002***	−0.001***	−0.145***	−0.001***
	(−3.763)	(−11.825)	(−3.741)	(−3.123)	(−11.612)	(−3.105)
Roa	0.001	−0.152***	0.001	0.001	−0.143***	0.001
	(0.831)	(−5.064)	(0.739)	(1.171)	(−4.767)	(1.144)
Growth	−0.000**	0.008***	−0.000**	−0.000**	0.008***	−0.000**
	(−2.383)	(3.643)	(−2.325)	(−2.483)	(3.895)	(−2.485)
Capint	−0.002***	0.022*	−0.002***	−0.002***	0.005	−0.002***
	(−5.064)	(1.701)	(−5.053)	(−4.490)	(0.415)	(−4.493)
Big1	−0.000	0.277***	0.000	0.000	0.273***	0.000
	(−0.000)	(21.440)	(0.348)	(0.083)	(20.820)	(0.124)
Mshare	−0.002***	0.207***	−0.001***	−0.001***	0.188***	−0.001***
	(−3.535)	(21.282)	(−3.369)	(−2.685)	(19.368)	(−2.637)
Mb	0.000	0.042***	0.000	0.000	0.046***	0.000
	(1.248)	(11.232)	(1.422)	(1.426)	(12.009)	(1.438)
Soe	−0.001***	−0.045***	−0.001***	−0.001***	−0.036***	−0.001***
	(−3.604)	(−10.109)	(−3.635)	(−2.885)	(−8.014)	(−2.892)
Constant	−0.001	−4.167***	−0.004	−0.005	−4.116***	−0.005
	(−0.356)	(−42.662)	(−1.108)	(−1.602)	(−41.616)	(−1.636)
Year&Id	Control	Control	Control	Control	Control	Control
N	18433	18433	18433	17595	17595	17595
R2	0.618	0.193	0.619	0.615	0.191	0.615

Notes: Columns (1)–(3) report the results of the indirect effect test when the SA index measures financing constraints. Columns (4)–(6) report the results of the indirect effect test when the KZ index measures financing constraints. See Table 1 for the variable definitions. All continuous variables are winsorized at the 1% and 99% levels. The t-statistics are calculated based on robust standard errors clustered by the firm and are reported in parentheses. ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively. Source: Author's Source.

Table 7. Path coefficients of risk level.

variables	(1)	(2)	(3)
	Fin2	Risk	Fin2
Risk			0.910*
			(1.865)
Dig_index	0.019***	0.010**	0.016***
	(5.191)	(2.332)	(5.174)
Fin_lg	0.298***	−0.033***	0.298***
	(13.591)	(−3.579)	(13.602)
Size	−0.001	0.001	−0.001
	(−1.566)	(1.397)	(−1.592)
Lev	0.002	−0.008	0.002
	(0.804)	(−1.559)	(0.830)
Roa	0.008	0.504***	0.003
	(1.483)	(24.455)	(0.539)
Growth	−0.001	0.002**	−0.001
	(−1.589)	(2.441)	(−1.643)
Capint	−0.009***	0.011***	−0.009***
	(−4.982)	(2.832)	(−5.041)
Big1	−0.012***	0.008**	−0.012***
	(−5.225)	(2.281)	(−5.253)
Mshare	−0.007***	0.012***	−0.007***
	(−3.988)	(3.379)	(−4.047)
Mb	0.000	0.014***	0.000
	(0.398)	(18.376)	(0.053)
Soe	0.001	0.009***	0.001
	(1.481)	(7.595)	(1.386)
Constant	−0.038**	−0.153***	−0.036**
	(−2.331)	(−6.757)	(−2.258)
Year&Id	Control	Control	Control
N	16205	16205	16205
R2	0.323	0.290	0.323

Notes: Columns (1)–(3) report the results of the indirect effect test for the level of risk-taking. See Table 1 for the variable definitions. All continuous variables are winsorized at the 1% and 99% levels. The t-statistics are calculated based on robust standard errors clustered by firm and are reported in parentheses. ***, **, and * represent statistical significance at the 1%, 5%, and 10% levels, respectively. Source: Author's Source.