Digital Finance and the Transformation of Scientific and Technological Achievements: Direct and Mediated Pathways Through Technological Innovation in China

By using the Peking University Digital Financial Inclusion Index, this study examines the connection between digital finance and the transformation of scientific and technological (S&T) achievements in China. Drawing on the “Darwinian Sea” metaphor, this study views digital finance as a dual infrastructure with financial and informational functions. Thus, digital finance may support the transition from invention to commercialization by relaxing financing constraints and alleviating information frictions. By using provincial panel data of 30 provincial-level regions from 2011 to 2023, this study conducts two-way fixed-effects regressions and robustness checks with the dynamic system GMM, distributed-lag diagnostics, and outcome diagnostics based on technology market turnover growth. Results show that digital finance is positively, but modestly, associated with the transformation of S&T achievements, with the coefficients being only marginally significant in some of the specifications. The transformation of S&T achievements is highly persistent, and government S&T expenditure is a highly robust correlate of provincial transformation performance. Robustness checks across the endogeneity and lag structure analysis results and outcome definitions point to the limited and insignificant effects of digital finance. The mediation analysis based on a product-of-coefficients approach with province-clustered bootstrap confidence intervals suggests the possible mediating role of R&D expenditures and patent grants, though the mediated share is modest and imprecisely estimated. The heterogeneity analysis identifies regional differences across the eastern, central, and western provinces, though formal tests rarely reject the equality of regional digital finance coefficients.