The role of FinTech in shaping urban innovation: A study of financial markets from the perspective of the patent renewal model

Abstract

This study explores the impact of FinTech on urban innovation through the lens of financial markets. We utilize a comprehensive FinTech index, derived from Baidu search data, and analyze the innovation capacity of Chinese cities using a patent renewal model. This model accounts for the varying value of patents over time, providing a nuanced understanding of innovation dynamics. Our findings show that FinTech plays a significant role in urban innovation, primarily by integrating into financial markets. We find that FinTech enhances market efficiency, stimulates investment in innovative ventures, and promotes financial inclusivity, creating a favorable environment for technological and entrepreneurial growth in urban areas. The effects are more pronounced in cities with well-developed financial infrastructure, large populations, low reliance on natural resources, and robust coastal economies. Additionally, we emphasize the vital role of intellectual property protection in strengthening the link between FinTech and urban innovation. Furthermore, we highlight FinTech's contribution to green urban development and its support for the real economy. These findings underscore the crucial role of FinTech, as viewed through the lens of financial markets, in driving urban innovation. The results carry significant implications for policy and practice aimed at fostering innovation-driven urban economies in the digital age.