FinTech and firm’s cash holdings: evidence from China
Digital Policy, Regulation and Governance
ISSN: 2398-5038
Article publication date: 13 July 2023
Issue publication date: 24 July 2023
Abstract
Purpose
This study aims to empirically explore the nexus between FinTech and a firm’s cash holdings.
Design/methodology/approach
A panel data regression analysis is conducted on a sample of A-listed firms registered on the Shenzhen and Shanghai Stock Exchanges from 2011 to 2019. To address simultaneity issues in the study, the authors use various endogeneity tests, including lag of independent variables, generalized method of moments and two-stage least squares estimation.
Findings
Results reveal that FinTech has a significantly negative effect on a firm’s cash holdings, suggesting that FinTech development improves cash management by alleviating agency costs and reducing financial constraints. The findings remain consistent across different FinTech measures and alternative cash holding proxies, demonstrating that FinTech serves as a corporate governance mechanism.
Practical implications
The findings suggest that FinTech disciplines corporate managers and alleviates agency problems regarding cash holdings.
Originality/value
This study suggests that FinTech determines a firm’s cash holdings.
Keywords
Acknowledgements
Competing interests: The authors declare that they have no competing interests.
Authors' contributions: I.U. collected the data and designed the method. A.Z. wrote the manuscript. The authors have read and approved the final manuscript.
Funding: Not applicable.
Citation
Ullah, I. and Zeb, A. (2023), "FinTech and firm’s cash holdings: evidence from China", Digital Policy, Regulation and Governance, Vol. 25 No. 5, pp. 522-541. https://doi.org/10.1108/DPRG-02-2023-0029
Publisher
:Emerald Publishing Limited
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