14. Internet Finance, Private Firm Financing, and Investment: Evidence from China

The chapter delves into the role of internet finance in bridging the financing gap for private firms in China, particularly in regions with varying levels of internet finance development. It presents a detailed analysis of private firm borrowing behavior across different financing channels and regions, revealing that internet finance has emerged as a significant but still relatively small player in the market. The study investigates the relationship between regional internet finance development and private firm financing, finding a positive correlation between the two. Additionally, it explores the impact of internet finance on private firm investment, concluding that funds borrowed through internet finance are not typically used for new investments. The chapter uses a unique dataset from national surveys conducted in 2013 and 2015, providing valuable insights into the evolving landscape of private firm financing in China. The findings have significant implications for financial sector professionals, researchers, and policymakers, highlighting the need for further support and regulation of internet finance to better serve private firms.