Digital finance, spatial spillover and regional innovation efficiency: New insights from China

Digital finance, as a new financial model, is increasingly attracting attention for its potential influence on regional innovation. By focusing on the nexus between digital finance and regional innovation efficiency, we first analyze the mechanism by which digital finance affects regional innovation efficiency, and then we empirically investigate its spatial spillover effect by employing the dynamic spatial Durbin model on the basis of a sample set of 31 Chinese provinces from 2011 to 2020. The results reveal that regional innovation efficiency had a significant spatial correlation and time dependence, globally, during the study period. Digital finance significantly contributes to regional innovation efficiency improvement, and such an effect has a significant positive spatial spillover. The spatial effect decomposition results report that the spatial spillover effect of digital finance affecting regional innovation efficiency is stronger than the direct effect. Besides, all three sub-dimensions of digital finance have spatial spillover effects, and the heterogeneity between eastern and central-western regions is mainly reflected in the spatial spillover effects of digital finance.