Open Access Journal Article

Has the development of the digital economy increased corporate financial asset holdings? --A quasi-natural experiment based on the "Broadband China" policy

by Xiuhai Huang a  and  Zhenyu Xu a,* orcid
School of Data Sciences, Zhejiang University of Finance and Economics, Hangzhou, China
Author to whom correspondence should be addressed.
JES  2024, 17; 2(1), 17;
Received: 25 October 2023 / Accepted: 10 January 2024 / Published Online: 15 January 2024


A differences-in-differences (DID) model and financial data from Chinese listed firms from 2011 to 2019 are used to empirically investigate the effects of the digital economy on corporate financial asset holdings using the "Broadband China" policy as a quasi-natural experiment. After robustness testing and heterogeneity effects are disposed of, the digital economy dramatically boosts corporate financial asset holdings. According to the channel analysis, the digital economy can reduce corporate financing constraints and boost corporate financial asset holdings, notably based on speculative demand. Heterogeneity analysis shows that the digital economy has a greater impact on corporate financial asset holdings for firms with higher market competition, small-scale firms with a short-listed age, and firms in the western region. This paper provides policy guidance for enterprises returning to the real economy.

Copyright: © 2024 by Huang and Xu. 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.


National Social Sciences Foundation of China (21BTJ032)

Share and Cite

ACS Style
Huang, X.; Xu, Z. Has the development of the digital economy increased corporate financial asset holdings? --A quasi-natural experiment based on the "Broadband China" policy. Journal of Economic Statistics, 2024, 2, 17.
AMA Style
Huang X, Xu Z. Has the development of the digital economy increased corporate financial asset holdings? --A quasi-natural experiment based on the "Broadband China" policy. Journal of Economic Statistics; 2024, 2(1):17.
Chicago/Turabian Style
Huang, Xiuhai; Xu, Zhenyu 2024. "Has the development of the digital economy increased corporate financial asset holdings? --A quasi-natural experiment based on the "Broadband China" policy" Journal of Economic Statistics 2, no.1:17.
APA style
Huang, X., & Xu, Z. (2024). Has the development of the digital economy increased corporate financial asset holdings? --A quasi-natural experiment based on the "Broadband China" policy. Journal of Economic Statistics, 2(1), 17.

Article Metrics

Article Access Statistics


  1. Almeida, H., Campello, M., Cunha, I., Weisbach, M.S. (2013). Corporate Liquidity Management: A Conceptual Framework and Survey. SSRN Electron. J.
  2. Almeida, H., Campello, M., Weisbach, M.S. (2004). The Cash Flow Sensitivity of Cash. J. Finance 59, 1777–1804.
  3. Bates, T.W., Kahle, K.M., Stulz, R.M. (2009). Why Do U.S. Firms Hold So Much More Cash than They Used To? J. Finance 64, 1985–2021.
  4. Becker, G.S., Murphy, K.M. (2009). Social economics: Market behavior in a social environment. Harvard University Press.
  5. Cheng, X., Qingxi, M., Xianjie, H. (2020). Network infrastructure and the diffusion of technological knowledge: evidence from a quasi-natural experiment. J. Finance Econ. 46, 48–62.
  6. Chunhua, C., Wei, C., Yanan, C., Xinjie, S. (2021). The Development of Digital Finance and Firms’ Transformation from Virtual to Real. J. Finance Econ. 47, 78–92.
  7. Cunha, I., Pollet, J. (2020). Why Do Firms Hold Cash? Evidence from Demographic Demand Shifts. Rev. Financ. Stud. 33, 4102–4138.
  8. Demir, F. (2009). Financial liberalization, private investment and portfolio choice: Financialization of real sectors in emerging markets. J. Dev. Econ. 88, 314–324.
  9. Ding, N., Gu, L., Peng, Y. (2022). Fintech, financial constraints and innovation: Evidence from China. J. Corp. Finance 73, 102194.
  10. Du, Y., Zhang, H., Chen, J. (2017). The impact of financialization on future development of real enterprises’ core business: promotion or inhibition. China Ind. Econ. 12, 113–131.
  11. Duchin, R. (2010). Cash Holdings and Corporate Diversification. J. Finance 65, 955–992.
  12. Duchin, R., Gilbert, T., Harford, J., Hrdlicka, C. (2017). Precautionary Savings with Risky Assets: When Cash Is Not Cash: Precautionary Savings with Risky Assets. J. Finance 72, 793–852.
  13. Fuster, A., Plosser, M., Schnabl, P., Vickery, J. (2019). The Role of Technology in Mortgage Lending. Rev. Financ. Stud. 32, 1854–1899.
  14. Goldfarb, A., Tucker, C. (2019). Digital Economics. J. Econ. Lit. 57, 3–43.
  15. Gong, C.M., Gong, P., Jiang, M. (2023). Corporate financialization and investment efficiency: Evidence from China. Pac.-Basin Finance J. 79, 102045.
  16. Goodman-Bacon, A. (2021). Difference-in-differences with variation in treatment timing. J. Econom., Themed Issue: Treatment Effect 1 225, 254–277.
  17. Goodman-Bacon, A., Goldring, T., Nichols, A. (2022). BACONDECOMP: Stata module to perform a Bacon decomposition of difference-in-differences estimation.
  18. Guo, J., Fang, H., Liu, X., Wang, C., Wang, Y. (2023). FinTech and financing constraints of enterprises: Evidence from China. J. Int. Financ. Mark. Inst. Money 82, 101713.
  19. Huo, P. (2022). Digital economy and business investment efficiency: Inhibiting or facilitating? Res. Int. Bus. Finance.
  20. Jiang, Y., Guo, C., Wu, Y. (2022). Does digital finance improve the green investment of Chinese listed heavily polluting companies? The perspective of corporate financialization. Environ. Sci. Pollut. Res. 29, 71047–71063.
  21. Kaplan, S.N., Zingales, L. (1997). Do investment-cash flow sensitivities provide useful measures of financing constraints? Q. J. Econ. 112, 169–215.
  22. Li, C., Wang, Y., Zhou, Z., Wang, Z., Mardani, A. (2023). Digital finance and enterprise financing constraints: Structural characteristics and mechanism identification. J. Bus. Res. 165, 114074.
  23. Li, G., Zhou, X., Bao, Z. (2022). A win–win opportunity: The industrial pollution reduction effect of digital economy development—a quasi-natural experiment based on the “broadband China” strategy. Sustainability 14, 5583.
  24. Liu, Yingyuan, Jin, D., Liu, Yuemin, Wan, Q. (2023). Digital finance, corporate financialization and enterprise operating performance: an empirical research based on Chinese A-share non-financial enterprises. Electron. Commer. Res. 23, 231–256.
  25. Livshits, I., Mac Gee, J.C., Tertilt, M. (2016). The Democratization of Credit and the Rise in Consumer Bankruptcies. Rev. Econ. Stud. 83, 1673–1710.
  26. Opler, T. (1999). The determinants and implications of corporate cash holdings. J. Financ. Econ. 52, 3–46.
  27. Orhangazi, O. (2008). Financialisation and capital accumulation in the non-financial corporate sector: A theoretical and empirical investigation on the US economy: 1973-2003. Camb. J. Econ. 32, 863–886.
  28. Peng, Y.C., Han, X., Li, J.J. (2018). Uncertainty of economic policy and financialization of enterprises. China Ind Econ 7, 138–155.
  29. Song, J., Lu, Y. (2015). U-shape relationship between non-currency financial assets and operating profit: Evidence from financialization of Chinese listed non-financial corporates. J. Financ. Res. 6, 111–127.
  30. Song, J., Yuxin, S. (2020). An empirical study on the effect of digital economy on real economy. Sci. Res. Manag. 41, 32.
  31. Stulz, R.M. (1996). RETHINKING RISK MANAGEMENT. J. Appl. Corp. Finance 9, 8–25.
  32. Sui, B., Yao, L. (2023). The impact of digital transformation on corporate financialization: The mediating effect of green technology innovation. Innov. Green Dev. 2, 100032.
  33. Sun, J., Shen, Y. (2021). How does digital finance affect the financial investments of real companies?–heterogeneous characteristics, mechanism testing and motivation identification. Mod Econ Res 9, 56–68.
  34. Sutherland, A. (2018). Does credit reporting lead to a decline in relationship lending? Evidence from information sharing technology. J. Account. Econ. 66, 123–141.
  35. Tian, G., Zhang, X. (2022). Digital economy, non-agricultural employment and social division of labor. Manage. World 38, 72–84. 10.19744/j.cnki.11-1235/f.2022.0069
  36. Xun, Z., Guanghua, W., Jiajia, Z., Zongyue, H. (2020). Digital economy, financial inclusion and inclusive growth. China Econ. 15, 92–105.
  37. Yang, J., Chen, S. (2023). Corporate financialization, digitalization and green innovation: A panel investigation on Chinese listed firms. Innov. Green Dev. 2, 100068.
  38. Yuan, K., Li, W., Zhang, W. (2023). Your next bank is not necessarily a bank: FinTech expansion and bank branch closures. Econ. Lett. 222, 110948.
  39. Zhang, C., Zheng, N. (2020). Monetary policy and financial investments of nonfinancial firms: New evidence from China. China Econ. Rev. 60, 101420.
  40. Zhang, Z., Su, Z., Tong, F. (2023). Does digital transformation restrain corporate financialization? Evidence from China. Finance Res. Lett. 56, 104152.
  41. Zhang, Z., Zhang, D., Brada, J.C., Kutan, A.M. (2019). Does Bank Competition Alleviate Financing Constraints in China? Further Evidence From Listed Firms. Emerg. Mark. Finance Trade 55, 2124–2145.