Digital Inclusive Finance Harvest: Cultivating Creditworthiness for Small Business

Abstract

Digital inclusive finance (DIF) is progressively reshaping traditional banking services through innovative technology to address global challenges. The diverse array of digital products and services offered by DIF empowers enterprises, enhancing their profitability and local competitiveness. This study investigates DIF's impact on firms' creditworthiness, using red-listed or blacklisted status in the National Enterprise Credit Information Publicity System as indicators. The dataset includes over two million small and micro agricultural enterprises, representing 80-95% of such enterprises in China from 2015 to 2020, with a panel structure that controls for firm fixed effects. Our analysis shows that higher county-level DIF indices significantly decrease blacklisting and increase red-listing. Credit investigations and local online investment trends have the strongest impact on improving creditworthiness. Notably, enterprises that had previously faced unfavorable loan conditions due to ownership, size, or industry benefited most from DIF.

Keywords: Digital inclusive finance, Agricultural enterprises, Creditworthiness, Red-listing and blacklisting, NECIPS.