Tech, Finance, and Education: Key Drivers of Firm Performance in China

What is it about?

This research investigates the impact of environmental technology (ET), digital financial inclusion (DFI), information and communication technology (ICT), and education on firm performance in China from 1998 to 2020. Using the quantile autoregressive distributed lag model, the study analyzes short-term and long-term relationships across various quantiles for both state-owned enterprises (SOE) and non-state-owned enterprises (NSOE). The findings reveal that ET and DFI have positive effects on firm performance, primarily at higher quantiles and in the long run. ICT and educational development show favorable impacts across all quantiles in the long run for both SOE and NSOE models. The research highlights the importance of these factors in improving firm performance in China, with asymmetric effects observed for DFI and institutional quality (IQ).

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Photo by 尧智 林 on Unsplash

Photo by 尧智 林 on Unsplash

Why is it important?

This research is important for several reasons: It provides insights into how various factors (environmental technology, digital financial inclusion, ICT, and education) affect firm performance in China, a major global economy. It differentiates between state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs), offering valuable comparisons between these two types of businesses. The study uses advanced statistical methods (quantile autoregressive distributed lag model) to analyze both short-term and long-term relationships across different quantiles, providing a more nuanced understanding of the variables' impacts. The findings can inform policymakers and business leaders on strategies to improve firm performance, particularly in areas such as environmental technology adoption and digital financial inclusion. The research addresses important contemporary issues such as environmental concerns, financial inclusion, and the role of technology in business performance, which are relevant to many developing and developed economies. Key Takeaways: Environmental Technology (ET): - Positively impacts firm performance in the long run for both SOEs and NSOEs at higher quantiles. - Short-term effects are generally insignificant for both types of enterprises. Digital Financial Inclusion (DFI): - Shows positive long-term effects on firm performance at higher quantiles for both SOEs and NSOEs. - Has more widespread short-term positive effects for NSOEs compared to SOEs. Education and ICT: - Both factors have a favorable impact on firm performance across all quantiles in the long run for both SOEs and NSOEs. - In the short run, these variables have a positive impact only at higher quantiles for both types of enterprises.