Digital financial capability and entrepreneurial performance

Abstract Utilizing the 2017 China Household Finance Survey (CHFS) data, this paper is among the first to define and measure digital financial capability (DFC), showing that it has significant and positive influence on business ownership, business innovation and financial performance. The results still hold after addressing endogeneity. Furthermore, we illustrate how DFC impacts entrepreneurial performance through sale, borrowing and investment channels. In addition, heterogeneity examinations show that improvement of DFC can benefit vulnerable populations more, especially those in rural or less-developed areas. This study calls attention to recognizing the importance of DFC for micro businesses in the digital era, and provides implications concerning both employment and economic inclusion policies for countries which might go through similar stages.