Does Digital Financial Coverage Promote SMEs’ R&D? Evidence from Chinese Listed Company

Small and Medium-sized Enterprises (SMEs) are an important impetus to the economic development in China. However, they face financing problems that may restrain their R&D investment and activity. Digital finance can provide an efficient and effective way to promote innovation and R&D development in SEMs. We use the 2011-2018 A-share listed SMEs data and Peking University digital inclusive financial index to investigate the relationship between the coverage breadth of digital finance and SMEs R&D expenditure. The results show that there is a strong positive relationship between the coverage breadth of digital finance and SMEs R&D expenditure, and this positive influence has no difference in large-scale enterprises or small-scale enterprises. This paper shows that digital finance helps to promote the innovation of SMEs and provides an important supplement to the traditional financial industry.