Fintech development, firm digitalization, and bank loan pricing

Using loan-level data of Chinese listed companies from 2011 to 2018, this paper finds a significant decrease in bank loan prices due to the regional development level of financial technology (fintech). For small and medium-size regional commercial bank lenders, a 1% increase in the regional fintech development level can reduce the spread of bank loans for local firms by 1.13 basis points. The reduction effect is greater for enterprises with more binding financial constraints and those headquartered in regions with a lower level of banking competition. In addition, this study discusses the policy effect of firm digitalization. The results show that firm digitalization can reduce bank loan prices directly while weakening the policy effect of fintech in reducing loan prices indirectly. To promote the coordination between fintech development and firm digitalization in reducing corporate financing cost, fintech enterprises should take the role of helpers of commercial banks rather than competitors.