Financial Institutional Reform and Digital Transformation of SMEs:Evidence from the Tiered System
The National Equity Exchange and Quotation System,commonly known as"New Third Board",is designed to provide financing services for innovative,entrepreneurial,and growing small-and medium-sized enterprises(SMEs).Compared with China's A-share market stock exchanges,the New Third Board possesses a unique attribute of a nursery,focusing on nurturing SMEs with growth and investment value.This distinctive characteristic of the New Third Board presents unique issues in its operation.The tiered system of the New Third Board,as a unique institutional design,aims to meet the differentiated capital service needs of SMEs,enhance the efficiency of capital market allocation,and support the development of SMEs.The report of the 20th National Congress of the Communist Party of China emphasizes the need to"support the development of SMEs"and"promote the deep integration of the digital economy and the real economy",highlighting the importance of SME digital transformation from a top-down perspective.However,at present,the effectiveness of digital transformation in China's SMEs is insufficient,and the experience of digital transformation is scarce.According to the Ministry of Industry and Information Technology's"Guidelines for SME Digital Transformation",SMEs,being numerous and widespread,are critical for digital transformation.Therefore,whether the capital market can provide guarantees for the digital transformation of SMEs is crucial for the high-quality development of the real economy.This raises the following question:Can the tiered system of the New Third Board drive the digital transformation of SMEs?This study takes New Third Board SMEs as the research object,constructs an index for the level of corporate digital transformation based on annual reports and financial data of SMEs from 2013 to 2020,and adopts the multi-period difference-in-differences model to investigate whether the tiered system of the New Third Board can drive corporate digital transformation.The study finds that the tiered system can significantly improve the level of digital transformation of innovative-tier enterprises.This indicates that financial institutional reforms can empower the digital transformational upgrading of SMEs,providing new impetus for the development of the real economy.The mechanism analysis reveals that the tiered system reduces information asymmetry in the New Third Board and alleviates the adverse selection problem between investors and enterprises,thereby reducing the cost of their digital transformation.The tiered system also improves corporate governance and addresses the moral hazard issue of management.The heterogeneity analysis finds that the driving effect of the tiered system on corporate digital transformation is more significant in groups with higher institutional ownership ratios,higher levels of human capital,and enterprises in high-tech industries.This study makes several contributions to the literature.First,it extends the impact of the tiered system to the level of digital transformation,enriching research on the economic impacts of financial institutional reforms.Second,it expands the literature on the causes of SME digital transformation.Third,it analyzes the transmission path of the tiered system from the perspectives of financing constraints and governance effects,constructs an index for corporate competitive strategy,and provides references for further improving the risk prevention of the New Third Board,characteristic financial institutional reforms,and the reform of the Beijing Stock Exchange.Regarding the policy recommendations,first,increase the intensity of market system reforms in the New Third Board and expand the financing channels for the New Third Board enterprises.In addition,improve the level of information disclosure and corporate strategic choices for the New Third Board enterprises,such as implementing industry-specific information disclosure regulatory systems in the New Third Board.Lastly,establish and improve relevant laws and regulations for institutional investors,optimize the investor access mechanism,and reasonably reduce the entry threshold for investors.
Tiered SystemSMEsDigital TransformationMulti-level Capital Market
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