{"title":"Digital finance and stock price crash: Evidence from China","authors":"Ping Zhang , Yiru Wang","doi":"10.1016/j.ememar.2025.101287","DOIUrl":null,"url":null,"abstract":"<div><div>In this paper, we study the impact of digital finance on stock price crash risk based on 293 Chinese city-level digital finance indexes and all A-share listed companies from 2011 to 2022. We find that digital finance can decrease stock price crash risk by the Generalized Method of Moments (GMM) dynamic panel regression model. The promotion of digital transformation, the increase of information transparency, and the decrease of financial risks are three plausible channels that allow digital finance to reduce stock price crash risk. These mechanisms shed light on the pathways through which digital finance can enhance market stability. Furthermore, our investigation reveals that the reducing effect is more pronounced in higher competitive industries and new technology firms. The conclusion enriches and expands the research on digital finance and corporate stock price crash risk, providing a theoretical basis for improving and stabilizing the Chinese capital market and promoting the development strategy of digital finance.</div></div>","PeriodicalId":47886,"journal":{"name":"Emerging Markets Review","volume":"66 ","pages":"Article 101287"},"PeriodicalIF":4.6000,"publicationDate":"2025-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Emerging Markets Review","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1566014125000366","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
In this paper, we study the impact of digital finance on stock price crash risk based on 293 Chinese city-level digital finance indexes and all A-share listed companies from 2011 to 2022. We find that digital finance can decrease stock price crash risk by the Generalized Method of Moments (GMM) dynamic panel regression model. The promotion of digital transformation, the increase of information transparency, and the decrease of financial risks are three plausible channels that allow digital finance to reduce stock price crash risk. These mechanisms shed light on the pathways through which digital finance can enhance market stability. Furthermore, our investigation reveals that the reducing effect is more pronounced in higher competitive industries and new technology firms. The conclusion enriches and expands the research on digital finance and corporate stock price crash risk, providing a theoretical basis for improving and stabilizing the Chinese capital market and promoting the development strategy of digital finance.
期刊介绍：
The intent of the editors is to consolidate Emerging Markets Review as the premier vehicle for publishing high impact empirical and theoretical studies in emerging markets finance. Preference will be given to comparative studies that take global and regional perspectives, detailed single country studies that address critical policy issues and have significant global and regional implications, and papers that address the interactions of national and international financial architecture. We especially welcome papers that take institutional as well as financial perspectives.
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