Does China’s Existing Regional Knowledge Base Stimulate or Hinder Diversification into FinTech: The Role of Local ICTs Base

ABSTRACTThe strand research of regional branching identifies relatedness as a key driver of new specializations in a region. The purpose of the present paper is to extend the regional branching framework by investigating how a regional knowledge base of information and communication technologies (ICTs) and others (non-ICTs) influences the specialization of financial technology (FinTech) in China at the city level. Accordingly, the empirical analysis focuses on the relationship between relatedness and FinTech diversification using panel data spanning the period 2008–2021 covering 247 China’s cities. We obtain that the role of ICTs relatedness is positively relevant in explaining the emergence and development of new FinTech domains. However, non-ICT relatedness is a negative factor in the process of FinTech diversification, which we attribute to the fact that FinTech is less reliant on other knowledge base except ICT sectors. Additionally, the effects of ICTs relatedness are higher in peripheral cities compared to core cities in promoting FinTech diversification.KEYWORDS: FinTechtechnological relatednessICTsregional diversificationJEL: O33R11O31 Disclosure StatementNo potential conflict of interest was reported by the author(s).Additional informationFundingSupported by the National Social Science Youth Foundation of China [Grant No. 19CXW028] and Innovation Project of Guangxi Graduate Education [Grant No. YCBZ2020020].