Open Access Journal Article

The Impact of Digital Inclusive Finance on China's Outward Foreign Direct Investment— An Empirical Analysis Based on Panel Data from 31 Chinese Provinces

by Zilong Li a,*  and  Paredes John b
a
International Business School, Tianjin Foreign Studies University, Tianjin, China
b
College of Computing, University of North Florida, Jacksonville, FL, USA
*
Author to whom correspondence should be addressed.
EAL  2024 3(4):70; https://doi.org/10.58567/eal03040005
Received: 21 October 2024 / Accepted: 8 December 2024 / Published Online: 26 December 2024
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Abstract

This paper employs a two-way fixed effects model and uses panel data from 31 provinces of China between 2012 and 2022 to empirically analyze the impact of digital inclusive finance on China's Outward Foreign Direct Investment (OFDI). The study finds that, overall, the development of digital inclusive finance in China significantly promotes OFDI. Its sub-dimensions, including coverage breadth and usage depth, have a significant positive impact on OFDI across Chinese provinces. Further analysis reveals that the sub-dimensions of usage depth, such as credit and payment, also have a significant effect on OFDI in various provinces. In addition, the control variable of economic development level significantly positively influences OFDI in China. Regional regression results indicate that the development of digital inclusive finance in central and western China significantly promotes OFDI in these regions, while the effect is not significant in the eastern region. Policy Recommendations: China should accelerate the development of a digital inclusive finance system and promote financial innovation. It is crucial to focus on the coordinated development of various digital inclusive finance indicators, narrow the financial service gap between regions, and thus foster the long-term development of China's outward foreign direct investment.

Keywords: Digital Inclusive Finance; Outward Foreign Direct Investment; Financing Constraints; Product Innovation;
Copyright: © 2024 by Li and John. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Li, Z.; John, P. The Impact of Digital Inclusive Finance on China's Outward Foreign Direct Investment— An Empirical Analysis Based on Panel Data from 31 Chinese Provinces. Economic Analysis Letters, 2024, 3, 70. https://doi.org/10.58567/eal03040005
AMA Style
Li Z, John P. The Impact of Digital Inclusive Finance on China's Outward Foreign Direct Investment— An Empirical Analysis Based on Panel Data from 31 Chinese Provinces. Economic Analysis Letters; 2024, 3(4):70. https://doi.org/10.58567/eal03040005
Chicago/Turabian Style
Li, Zilong; John, Paredes 2024. "The Impact of Digital Inclusive Finance on China's Outward Foreign Direct Investment— An Empirical Analysis Based on Panel Data from 31 Chinese Provinces" Economic Analysis Letters 3, no.4:70. https://doi.org/10.58567/eal03040005
APA style
Li, Z., & John, P. (2024). The Impact of Digital Inclusive Finance on China's Outward Foreign Direct Investment— An Empirical Analysis Based on Panel Data from 31 Chinese Provinces. Economic Analysis Letters, 3(4), 70. https://doi.org/10.58567/eal03040005

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