Digital Financial Capability and Entrepreneurship in China: A Digital Economy Perspective

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Abstract
The digital economy is the fastest-growing sector in the world today, and will also be the key development direction of China in the future. The level of digital financial capability (DFC) determines whether households can fully embrace the inclusivity of digital finance and seize the business opportunities presented by the digital economy. Hence, we utilized panel data from the China Household Finance Survey (CHFS) and built a probit model with two-way fixed effects. The results revealed that DFC has a positive impact on household entrepreneurship through both supply- and demand-side mechanisms. The results also revealed that DFC has not only catalyzed the evolution of digital business models but has also enhanced the digital business performance of enterprises. The analysis of heterogeneity confirms that DFC can promote entrepreneurship in rural settings and in the retail and restaurant sectors. This research has important theoretical contributions and policy suggestions for governments to help them pay attention to the inclusive role of DFC in developing the digital economy.

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